A break of 850-880 in the SP would put this bull run on ice.
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Short now when you still have the chance
- Thread starter niteowl8
- Start date
Quote from AyeYo:
I don't think he's taking into consideration the FED pumping the market. That wasn't a factor in 1929, but is now. This fake money rally can go as long as Bernanke is turning the money crank. You keep giving your kid money to buy candy and they'll just keep buying it. Or am I looking at it wrong?
Good point. Here is an article that touches on how the fed acted in 1929 and the years that followed:
http://www.hoover.org/publications/policyreview/3476271.html
The basic premise of this article is correct -- you can't fix a debt bubble with more debt. All that does in inflate the baloon further. The market will crash again but it could be years before that happens. If inflation kicks in all will be well. If it doesn't look out. If you're wondering if inflation is coming back in all you have to do is watch Oil. Until we lick our dependence on Oil it will be the best inflation barometer because as Oil goes higher the cost of goods and services go higher. Inflation is on the horizon -- lots of it. The market will go higher until inflation chokes it off. Conclusion: A crash is not imminent.
Quote from wjk:
I found his chart comparison to 1929 very interesting.
Today's DOW chart looks very similar to the 1929-30 chart. I made a comment about that in June in this thread http://elitetrader.com/vb/showthread.php?s=&threadid=168289
The 1929 DOW rallied off the bottom for 5 months for a 52% gain before turning downward for two years blowing away the 1929 lows. A similar gain in today's DOW would put it near the 9800 level. I doubt the DOW will have a monthly close above the 20 month MA this year.
I have been a stock market bear during this entire recent 4 month rally and missed out on some pretty hefty gains. However, the 200 day moving average is starting to move up and I agree that the massive government money-printing program has temporarily turned the stock market around. However, all of this debt, which is virtually un-repayable, will lead to a day of reckoning in the future. The coming decline may not even happen this year. However, I would not be surprised if we had a pretty significant Black Monday, Friday, (you pick the day) sometime in September or October of this year. So, I am cautiously long a few stocks and ETFs, but am being careful to maintain my stops.
Pull up a chart of the Dow for the last 50 years.. MONTHLY chart.
What appears to be forming is the right shoulder of a massive head and shoulders formation. While I agree a crash is imminent, it might not be for 4 or more years until the shoulder is fully formed. We'll probably see the Dow exceed 10K and the president will be sure to take credit.
What appears to be forming is the right shoulder of a massive head and shoulders formation. While I agree a crash is imminent, it might not be for 4 or more years until the shoulder is fully formed. We'll probably see the Dow exceed 10K and the president will be sure to take credit.