The Ghost of 1929 Crash Haunts even today...
You are missing trading opportunities:
- Free trading apps
- Over 8,000 signals for copying
- Economic news for exploring financial markets
Registration
Log in
You agree to website policy and terms of use
If you do not have an account, please register
The Ghost of 1929 Crash Continues To Haunt...
By Alessio Rastani
Friday, 21 February, 2014
There seems to be some weird similarities between the recent action in the stock market and the way it acted right before the crash of 1929.
A month ago I mentioned how traders in Wall Street were passing each other a "scary chart" with two lines on it. The chart seems to predict a 1929 style crash - see below:
------------------Announcement-------------------
Forex "Bentley" Trade Takes Off
Our superior "Bentley" forex setup finally took off on Wednesday. Here's the next targets. Click Here for our Premium analysis
---------------------------------------------------
Please click "display images" to see this chart
This pattern was first identified by chart analyst Tom Demark. At the time it caused some traders to simply roll their eyes and walk away. It's very hard to take something like this quite seriously.
Even Tom Demark commented: "Originally, I drew it for entertainment purposes only," he said-but no longer: "Now it's evolved into something more serious."
Mark Hulbert said in the Wall Street Journal: "One of the biggest objections I heard two months ago was that the chart was a shameless exercise in after-the-fact retrofitting of the recent data to some past price pattern. But that objection has lost much of its force...".
My own verdict on the scary chart?
I actually do believe that a major 20% to 30% "crash" or correction will occur in 2014. But not quite on the scale of a "1929-style" crash like in the scary chart.
However, despite the extremes in margin debt levels and hyper-bullishness of investors who think this market will continue going higher, I doubt such a crash will happen so soon.
Also, corrections of 10 to 20% are far more common and likely than a 50% crash in the markets like we had in 2008 or 1929.
In any case, the validity of the scary chart will probably be erased if the stock market goes above the December peak at 16,588. If we go above that level, we can expect market bulls to have control and for the market to rally higher, potentially to 18,000 by May 2014.
As I said, after May 2014 I do believe a major correction will occur, which most likely will drop the markets to just a little below where we are now.
In the meantime, I am sure there will be further speculation and articles like this about similar scary charts...
Good trading!
Alessio
P.S. The crash is possible anytime as we are in worse economical and financial crisis then we think and there is no way back to improvement, only spirals down, because there is no solution possible without sacrifices! Greed does not sacrifices - Greed is irrational!
Cheers Hermes