Saturday
Stocks1937 vs 2009 Bear Market Comparison Update: 22 Jan 2010
For new readers, here are our previous posts comparing 1937 to 2007:
1. Using Fibonacci Numbers to Predict the Market
Quick Update 1937 vs 2007 Bear Market Charts:
(Blue: 1937 ; Pink: Current Bear Market; Y axis: percentage from top; X axis: number of days from start of bear market)
So are we at the first peak (A) or the second peak(B)? How far further can markets fall before the bulls will come in? We zoomed in to look at it closer:
Few points:
- More room to fall before rally
- Expect a decent rally after the fall - the H&S level drawn on chart is the obvious target. However, if markets decide to fall further, then the second lower H&S level (not drawn) will be the next short entry level. However, looking at previous tops, the subsequent rally will usually get quite close to the top. We aim to release some of our shorts if markets fall further this coming week, and re anchor additional shorts after market rallies. Our trades in the coming week will assume that the market has topped (ie with a stop at the previous high)
- A stop at previous high - based on A and B in 1937, markets on both occasions did not break above the top at the subsequent (contiguous) rally. This will therefore be a safe stop to have in the unlikely event that markets have not topped.
- Our India NIFTY shorts remain the best shorts at this point.
Have a great weekend fellow traders. We need to be rested before next week. See you in the battle field.
Post Tags: 1937 and 2007 comparison, Bear Market Comparison, Technical Analysis
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Jul 26, 2010
Reply
Hey Admin, any chance of a 6mth update to the graph?
The drop has happened, the rally has started and if the correlation is similar we should see it reach 5000 in the next few months, before another drop.
Jul 28, 2010
Reply
supabrudda, updated charts here : http://theinflationist.com/stocks/1937-versus-2007-bear-market-comparison-update-27-july-2010. Hope it helps. I am not too sure about 5000, depends how the rest of the world holds up. But you are spot on, even if the rest of the world stays where they are, there is a chance of a double top at 5000. Most rallies do double tops (anecdotal observation evidence only). The news to make this come true will be the election, empty promises, and upbeat media (controlled by people with vested interests in a rising markets).