Click charts to enlargeThe chart at the top is a chart of the Dow from 1969 to present. It's a log chart, wherein each vertical unit equals the same percentage as the others. This removes the parabola effect charts tend to have when viewed long term.
The way we see it, from 1964 (not shown) to 1982, the market went sideways (for 18 years). Then it expanded from 1983 to 2007.
2008 changed everything, and we've now entered a new stage for the market. Although we've drawn the trendline in such a way as to make it look like 2008 was the start of a whole new macro-trend for the market, there is another possibility. 2000 may have been the top, and we've been in a sideways market ever since. This certainly would jive with the 18 year cycles the market typically has, as shown on the lower chart.
This chart shows that the market goes up for 18 years, then consolidates for 18 years. If 2000 was the top, then 2018 will start the new bull market. Good news, we're halfway through the market's consolidation phase!
If we truly are in the midst of an 18 year consolidation which began in 2000, then the market's highs and lows may have already been carved out... more or less. Of course, 1000 points on this chart just looks like a blip. Nevertheless, a look at the market's last major consolidation (from 1964 to 1982) shows a market that moved in a 50% range, from 1,100 to 550. This is very similar to the range we're trading in now, from 14000 to 7000.
If you believe that macrotrends repeat themselves, then you would be looking for the market to bottom soon, rather than looking for the Dow to continue its slide to 5,000.
12 comments:
Look like we are head into DEEP DEEP DEPRESSION!
Does anyone have any ideas on UYG, im not an expert chart reader but does SKF and FAZ seem to be at a resistance level, meaning that UYG may get a little pop, any thoughts. thank you
Snot,
Message 9 for you under the LDK article. Please clarify.
An
Wow! what else can you say... C at $1.90, BAC at $3.10, GE at $9.20, GM at $1.70, the Dow closing in on a 50% correction, not many predicted this kind of carnage a year ago! This is actually getting a little scary now. If C and BAC do not survive, what then?
One would think that if GE is around in 20 years, we'll look back at today and wonder why we didn't back up the truck. But now that we're in the midst of all this, who wants to buy GE at $9 just to watch it drop to $2?
Seems like all stock are reverting to their intrinsic values. Somewhere around 14 cents, GE's share price will reflect the value of its tangible assets. That's not to say they don't have much, but with 10,460,000,000 shares outstanding, people are correct to question what these things are REALLY worth. It's a wonder they haven't ever questioned it in the past!
An,
We've been bearish on LDK for so long now, that we don't even remember where we first said to dump it. Somewhere around $52? Ever since then, people like yourself have been singing its praises, claiming that solar is the future and that LDK has 46,000 gigawatchas, yada, yada, yada...
Like who cares? Don't you get it? It was a sell at 50, still a sell at 45, and at 40, 35, 30, 25, 20, 15, 10, etc.
Every time it goes down 5 points, you people come out of the woodwork to tell us how "cheap" it is! Buying LDK today will lose you 50% in no time. Don't you get it yet? Your mentality has GOT to change, or else you're going to lose everything. Don't fall in love with any stock. They all go to zero eventually.
gold is on fire today. intraday high 1005.50/ounce broke the high of 1002.80.
rl
UYG: imho, you're playing with fire on anything related to financials, including uyg, skf, fas, faz, etc.
wild, wild swings. if you can stomach 10-25% loss per day for a possible 10-25% gain per day, then these are the right rollercoasters to ride.
but, i imagine uyg longs have lost a lot of sleep lately, not to mention a whole lot of cash!
personally, i might take a small gamble on uyg IF we see a huge down day, like 500 points down. that would be for a very very short 1-2 day dead-cat bounce trade...
rl
Theres the little pop in UYG intraday
well, i had a pretty good feeling that gold wouldn't hold above 1000 today, but nonetheless gold looks very strong to me. i am expecting it will test 1003 again shortly and i'm hoping for a break and close above that.
is anyone here following gold as closely as me?
rl
Hi Snot,
Did you full any trigger to buy today or we have to wait for down 500?
Oop! I mean DOW 500! any way I loss a ton of money in 401K and some investment in broker account! I am a poor guys now in the '50.
I told you last wednesday the decline is coming (bear flags on the bank stocks, the USB was the first which had broken the trendline). It was so predictable.
The action of the last days and today's action was predictable, too.
The panic selling then after the bounce.
Call me lucky but I shorted the market all the way down until the temporary bottom on the SP500 around 760-755, then I covered all of my shorts and went long on BAC with tight stop, AAPL, IBM and SSO.
Today's bounce was not as powerful as I wish, so be careful.
We have some room up until ~800, but I think this is just a dead cat bounce.
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