Scary DJIA Projection Based on Comparison of 1929-1932 and 2007-2010 Bear Markets

Posted: October 10th, 2010 under Predictions, Stocks.

The future ain’t what it used to be – Yogi Berra

 

If you are looking for a Halloween fright his scary chart may provide it. It projects what the rest of the bear market may look like based on the assumption that the April 26th 2010 high was a wave 2 top matching the April 1930 top except this time at greater Elliott Wave degree. The black line is current DJIA prices from 1987 to date. The red line is the 1929-1932 bear market scaled to match in both price and time based on two points:

 

  1. The 1929 top equals the 2007 top.
  2. The April 1930 high matches the April 2010 high (wave 2)

 

The projection shows the bear market low around 8 years in the future at a price somewhere in the range of the 1987 crash (the small cliff at the left edge of the chart). The vertical scale is logarithmic, and the approximate range is 1500-15000. So this would put the bear market low in the 2000 area for the DJIA approximately an 86% drop from the 2007 all-time high. It would be equally valid to match the spike lows in November 1929 and March 2009 to each other and scale the red line based on those and the tops, which would be much more pessimistic.

 

Click chart to enlarge. Permission is granted to distribute this chart provided it is not cropped or modified other than scaling and all the text is kept intact and legible.

DJIA Projection Based on Comparison of 1929-1932 and 2007-2010 Bear Markets

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1 Comment »

  1. Correllations from the 1930’s are interesting. The late 1930’s might also be considered for a possible analog period to the present time where the total stockmarket valuation peak to include the Nasdaq represented the secular bull peak in 2000 versus the 1929 peak, within the secular bear the cyclical bull peak of 2007 represents 1937 with the low in 1938 correllated to the March 2009 low followed by a recovery into 1939 corresponding to the present time period in 2010. There are some similar attributes associated through the 1930’s with the magnitude of the 1937-1938 decline with the 2007-2009 decline, commodity cycles, stock market recovery, along with presidential and Federal Reserve policy announcements and responses.

    Comment by Jon — October 15, 2010 @ 8:07 pm

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