The chart above is that of the S & P 500 index on a weekly basis going back to around October 2015.
I have found that the recent runup in the markets from around the end of August of 2019 looks very similar to the move higher we saw from April 2018 to September 2018.
The recent move has, of course, carried a lot more momentum as it went way past the previous high while the move in 2018 did not experience as much of a melt-up in prices.
As such the initial drop after September 2018 was not as sharp or precipitous as the one we saw in the last week of February 2020. The set up though looks relatively similar in both occasion though.
So going forward there is, in my opinion, a high probability that we could see a choppy period of consolidation as we witnessed between the end of October 208 and the beginning of December 2018. Let us say we could have choppy range trading between 2850 and as high as 3200 for the next four to six weeks as a bear flag forms on the S & P 500 index chart.
In terms of the magnitude, we could see a second drop that could be around 1.64 ( 18/11) times the drop we saw last week from the all-time high in the first half of February to the low last week which was around a drop of 16%.
Back in 2018, the initial drop was one of around 11% and then the second drop measured from the top of the bear flag was one of roughly 18%. As the current potential consolidation or bear flag has not formed yet we will take 3150 as a potential top for the flag.
So we could see a drop of around 26.24 % (16 * 1.64) from the 3150 level and that would mean a drop to around 2324 in the S & P 500 index.
*This is not investment advice and is only my opinion of what we could see play out in the stock market going forward.