S&P Regression to Trend

Yesterday, we discussed an ongoing Marketwatch chart on historical trend regressions (Is the Market Bottom in Sight (Again?)).

Peter Brimelow and Edwin S. Rubenstein have argued that markets bottom when they fall to 40-42% below trend.

Doug Short disagrees. As he shows in the chart below, markets have dropped as much as 67% below trend, with bottoms at levels of more than 50% below trend.

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