A comparison I have been looking at recently is the DJIA (INDU) crash in 1929 versus the Nasdaq Composite (COMPQ) crash of 2000. There are a lot of similarities that are lost when comparing the DJIA to the SP500. The market of 1929 was over leveraged just as the current market is (or was). I have seen comparisons to the markets in the 1970s, but I don’t believe a large de-leveraging process occurred during that period.
First let’s look at the DJIA crash. The DJIA dropped 90% from the high to the low in 1932 - 34 months. Price bounced from 1932 to 1937 along the 1×4 Gann angle (with respect to the slope of the bear market drop). Price then began dropping again down to the 1×8 Gann angle. At 102 months price broke through the 1×8 angle in a one month plunge. From this point, price rose approximately 60% for 8 months.
The 2000 Nasdaq Composite bear market dropped slightly less than the 1929 DJIA - 78%. This move lasted 31 months. Price then bounced from 2002 to 2007 along the 1×4 Gann angle (with respect to the slope of the bear market drop). Price then began dropping again down to the 1×8 Gann angle. At 102 months price broke through the 1×8 angle in a two month plunge (so far). Assuming price will continue to follow the DJIA pattern, price should rise approximately 60% eight months from the low. Guessing that the low will be in during October, the next high will be June/July of 2009. The 1×8 angle is a good place to consider taking profits (assuming this plays out).
Tags: Dow Jones Industrial Average · Market Cycles · Roadmap · Standard and Poor's 500 (SP500)2 Comments
2 responses so far ↓
Andy, I have to congratulate Joe P for putting an a– whooping on the ‘Buckeyes”. The old man deserves a gold medal for all his years of service and dedication to the game. He will be remembered just like this Historical move in the stock market. Go Lions! I hope they win National championship(I think they’ll win the Big Ten Hands down now). OK back the the market, rumor has it the “Treasury was monitoring the markets on Friday”, I think that means they where buying, and held our little party up. Now, most everyone loves a good Party, especially when it was the Anniversary to the Crash of “29″, (79 years young), Now bear(no pun intended) with me, the Nasdaq, made a new Low,(so did our favorite beverage in the U.S, OIL). I found that interesting, The Nasdaq is in open territory now, the next move could be to the lows of 02″.
Libby - As much as Paterno has done here, there are always 25% of the people who want him fired… I’m sure the radio shows will say PSU should have won by 20 and Paterno should have played quarterback…
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As for the Nasdaq, you may be right. I’m not buying anything until I see a better setup.