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Dow-Nasdaq Analog - Updated (through end of 2007)    

Friday, October 19, 2007 - I firmly believe that the U.S. Equities market top last week on Thursday is of a long term nature and that we are about to enter a one to two year bear market in U.S. equities.

I have been closely following the zig-zags of the recent Nasdaq market compared to the Dow during the period from 1924-1937, as you can see in the chart below, and last week it appears that the ultimate top in 1937 lined up with what could be a major top for quite some time. As you can see from the charts, if history repeats, or even rhymes, we will have a rough road ahead.

Friday, October 12, 2007 With this post we update a chart we published back in May 2007 which shows an overlay of the Nasdaq Composite index on top of a chart of the Dow back around the 1929 crash and bear market. We may have reached a top if this analog is a guide.

The Nasdaq Composite index (COMP) had a 'big' outside day decline on Thursday, opening and rallying to a new 52-week high, then slamming down to take out all the gains made so far this week with a close down -1.4%. The five day percent move (which includes the previous Friday's gains, is still a posiive 1.4%, and the bullish trend is still mostly in place, as the index closed above its 200, 100, 50, 20 and 10-day average prices. It crossed below the five-day moving average. But all bear markets start with the indexes in max bull-trend mode, so there is not great comfort in this trend picture, especially given the analog chart below.

Anthony Kolton is president of Logical Information Machines and Markethistory.com, Inc.

Related Ideas:

• Dow 1930s versus Nasdaq in the New Millennium (UPDATED Chart) - May 3, 2007

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