Discussion in 'Stock Market' started by DavidS, Jul 1, 2010.
I love when investors think like this. It makes it so much easier for the rest of us to make money.
So is 12K... Or even 14K.
I'm 38... Not really Concerning myself with a 5yr window in the Market.
Further evidence to back up my theory...
Dow May Crash to 7,500 If 10,600 Not Breached
Seeing there's been quite a bit of interest in my recent comments on CNBC about the historical parallels between the Great Depression and the recent financial crisis, I thought it may be appropriate to elaborate further on the chart technicals behind the observation.
The causes may have been different, but the collapse of the U.S. markets in early 2008 followed the same behavioral patterns as the collapse in 1929. The recovery pattern seen in 2010, is also very similar to that developed in 1930.
The crash of the Dow Jones Industrials in 1929 was signaled by the development of a well defined head and shoulder pattern, seen most clearly in its monthly chart. It is a reliable pattern that captures the behavior of investors who are becoming increasingly disillusioned about the future prospects for economic growth.
The downside pattern targets in the 1929 Dow were exceeded with a fall of around 49% before the market recovered in 1930. The 2008 dow pattern targets were also exceeded with a market fall of around 52%.
In 1930, the market developed an inverted head and shoulder rebound pattern recovery that led to a 46% rise in the market. The Dow rebound in 2009 also developed from an inverted head and shoulder pattern. This was a powerful rise of around 69%.
The historical development of the recovery in the DOW in 1930 ended with a new head and shoulder pattern. This was followed by a rapid market decline that created the first part of a long term double dip pattern. This retreat also exceeded the pattern projection targets with a fall of 28%.
Fast forward to today, we're seeing the Dow is developing a new head and shoulder pattern which indicates a beginning of a bear market. The rally peaks in the Dow appear in January and May and June. The downside projection taken from the neckline of the pattern sets a target at 8,400, or a 25% decline.
A very bearish analysis using the pattern of retreat behavior in 1930 suggests the Dow could retreat to around 7,500 in 2010.
The head and shoulder pattern in the Dow and its downside targets, are invalidated with a sustainable rise above 10,600. A move above this level does not signal a resumption of the uptrend, but it does reduce the probability of a double dip.
It must be noted that while the behavioral patterns in 1930 and 2010 are similar, they don't necessary point to the same result. But it does sound a warning that markets could continue to stand on the edge of a precipice.
Earnings are way up this qtr. Your gonna have to wait for the sky to fall chicken little.
It's negative compared to when Clinton was in office.
Compared to the Bush/Republican disaster, it's stellar.
Only six percent think rdean is capable of going 24 hours without saying the word "republican".
Compared to your IQ the Dow is stellar. But then again, so is your hat size.
The market is being driven by machines and algobots. Something like 70% of trading is quantitative.
Toro this may sound snide but if the efficient market hypothesis were right then a whole host of other things would follow such as 0+ alpha stocks would make up all of the longs and be hedged by shorting 0>alpha stocks. I don't see such behavior so I don't see how HFT can be long run profitable was that your point?
You should get mad at the Republican leadership, not me. They're the ones who apologized to BP. Called the unemployed "whiners and bellyachers" and compared children who get free lunch in schools to animals who will breed if you feed them.
They're the ones who gave trillions to the rich, 35 billion in subsidies to oil companies but don't want to help the unemployed because 3% of what they gave to the rich would be "too much".
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