OK, fine, I'm obsessed. It's 11 o'clock in the evening, I really should be in bed, but I keep staring at my freshest take on the 1937-1942 analog. Here's my newly-labeled Past:

And here's my newly-labeled Present:

Some observations:

+ The behavior of the analog from points 0 to 12 is, to me, breathtaking;

+ The behavior from 12 to 17 is still astonishing, but the waves of the Present are more muted than those of the Past; I attribute this to historically unprecedented government intervention. The relationships are still there, but they are somewhat softer.

+ This tells me that point 17 – that is, the high in late April – is not going to be overtaken. S&P 1250 is not going to happen. In fact, if this analog holds, such a figure will not be seen for years.

The big question for me is whether the big drop (circled in red in the Past graph) transpired late in June, or if it still is going to take place. I am not comfortable labeling anything past 17 at this point.

I had said earlier this month that the big drop must have already happened. I'm having second thoughts. I cannot divine how to compare the activity from late April until now with the same chunk of the analog in the late 1930s.

The principal point of this post is to make clear that I am not convinced a drop into the low 900s this year is off the table yet.

As regular readers know, my 1937-1942 analog is very important to me, and it is something I have been following carefully for nearly two years now. There have been times when I've wondered if the analog had decoupled from the present, but each time, I find that it is holding fast.

The last time I took a hard look at this analog was back on August 8th, which called for the market to resume its fall shortly. In fact, the fall resumed almost at once, and equities stayed weak pretty much the rest of August. I guess Mark Everett's very nasty email was ill-informed.

But here's where I went wrong……..and it was a big wrong. I thought we were going to get one large down-move (labeled below as from "d" to "e"), but that move had already taken place between June 21 and July 1. We were already in the upswing, and my belief is that we are now at point "h" on the graph below.

This "recount" is pretty severe, because my expectation was that "e" was going to fall to 925, when in fact it didn't even make it to 1,000. I was positioned aggressively for this supposed fall, but we in fact went from "g" to "h".

Here's a closer look at the late 1930s; again, my view is we are at, or very close to, point h:

And here is the current market; compare this with the one immediately above to see the analog.

So let me net it out for you:

+ The bad news for the bears, I believe, is that no "mini-crash" seems to be forthcoming this year.

+ The good news for the bears (and it's small comfort, considering the hit I've taken this month) is that a small drop – less than 100 S&P points, I'd say – is imminent.

+ The good news for the bulls is that, following this aforementioned dip, it looks like we'll rally strongly, approaching the April highs.

Referring back to the first chart, I think that after this big rally, we are going to be in for the World's Most Boring Market Ever for a number of months, after which time some kind of Shock Event (which I've labeled S.E.) takes place. That would be sometime in 2011, although I have no idea when.

Some might think I'm making too much of this analog (I'm sure our buddy Mark Everett would), but the longer this analog continues to nail turning points, the more faith I have in it. My "miscount" (Good God, I sound like an EW'er – ugh) is regrettable, but the fuzziness of the past couple of months made it very hard to be sure where to align the points. I'm pretty confident in my current analysis, and I think the bears are going to enjoy some mild relief in the coming weeks, followed by a hearty rally – – – inspired, probably, by some emergency assistance in late October from Shalom.

Foreign Sloper Correspondent Serge sent me a fantastic analog today. Here's the QQQQ from a decade ago:

And here's where we are at presently:

They even had their own "flash crash" back on April 4, 2000, which was the day Microsoft did an earnings warning. Fascinating stuff!