© Copyright 2008-2012, MarketHistory.com
Unauthorized mirroring, photocopying, facsimile or any other
distribution of this copyrighted material is prohibited.
All rights reserved.
Update - Dow 1924-1937 Analog 
Thursday, March 20, 2008
By Anthony Kolton
20 March 2008 - WE MAY GET A RALLY BUT THE BOTTOM IS A LONG WAY OFF, maybe sometime late this year or early next year.
Finally, there was an article in Friday's USA Today that the DJIA was been up or down 53 times by a percent or more, and the last time we saw this much volatility was 1938. This is the period (1937-1938) that I think matches the best up with what we are going through now in the stock market. Back then, you had a monster rally that made everyone believe that the decline was over, only to see the stock market then turn around and make significant new lows. I do not think that we are out of the woods yet.....not by a long shot!
9 January 2008 - Back in May I featured an analog chart3 that shows the closely related patterns of movement between the Dow, which peaked in 1929, crashed and then bounced around for the next several years with the Nasdaq from the 2000 peak. At that time I recommended that equity investors should get clear of stocks by the end of August.
Then again, in October, I revisited this chart4, observing on October 11th (with the story published the next morning) that it was likely that would be a long-term top based on this analog match. In an October 11th email to Gibbons Burke, editor of MarketHistory, I wrote "I think we saw the TOP of the market TODAY!". That observation has proved to be correct, as you can see in this chart:
The following week I featured this idea on my blog5 where I said: 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. 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.
Now, based again on the analog, I think we may see a strong rally, but it won't take out the October high. But after this rally, the analog indicates the market may head way lower.
Anthony Kolton6 is president of Logical Information Machines7 and Markethistory.com, Inc.
Related Ideas:
- Dow-Nasdaq Analog - Updated (through end of 2007)8 - October 12, 2007
- Dow 1930s versus Nasdaq in the New Millennium (UPDATED Chart)9 - May 3, 2007
 |
| Analog Chart is updated through Thursday, January 23rd, 2008 |
* * * |
Comments:
Web Address of this trading idea:
Links:
2 http://www.markethistory.com/content/analog/analog.html?ticker=COMP
3 11288.html
4 12588.html
5 http://blog.lim.com/
6 http://www.markethistory.com/staff/detail.html?s=kolton
7 http://www.lim.com/
8 http://www.markethistory.com/subscribe/best_of/content.html/12588.html
9 http://www.markethistory.com/subscribe/best_of/content.html/11288.html