I have posted here about the correlation of the current Nasdaq market to that of the Dow Jones Industrial Average from 1929-1942. This morning I want to look at the move up from March to November in 1938 and how this relates to the move of the Nasdaq off the March 2009 low.
The move in 1938 began on March 31 and lasted 224 days before a long term correction began. The mid-point of the move had price up 51% and the final high 112 days later pushed price to 63% off the low. Note the bullish look of the 1938 market before it just decided to stop and start down.
The current move of the Nasdaq has already exceeded the percentage move of 1938 with 69% as of yesterday’s close. Price has exceeded 189 days from the March low which ends the range Gann suggested watching for a change in trend (180-189 days). The final cycles I see to be concerned with are the mid-point cycle of 95 days before the June correction and 96 days into yesterday’s high and the 224 days the DJIA moved up in 1938. A move equal in duration to that of 1938 would take price up into mid-October. But it is possible that the cycle mid-point high is the same in 2009 as in 1938 and price will roll over from here. I think a new closing high after today would negate this possibility.
The chart below shows what happened to the DJIA from 1938-1942. Price dropped 25% in 159 days and then bounce and tested the high in an approximately equal amount of time. From the point price dropped to in 1942 and finished the bear market, it was down 42% from the 1938 high.
Remember that the market prior to the time frames discussed above matched up well between the historic DJIA market and the current Nasdaq Market. I am not saying the bull run is complete or that a long bear market will follow. But I entertain that possibility in my investment plans.
Nice work, and good chance for it to come true.
Today BullishP% on SPX and NDX are highest ever at 87.6 and 93. … maybe we’ll find out through hind sight that this is how big time Bull markets start?
Ray – keep in mind if this is the biggest bull market ever, there will be significant pullbacks. After this long a run I expect one soon. Significant may be in price, time, or both.
correction**************
Nice work, and good chance for it to come true.
Today BullishP% on SPX and NDX are highest ever at 87.6 and 93 and if used as contrarian indicator means markets are in trouble . … OR maybe we’ll find out through hind sight that this is how big time Bull markets start?