. . . are doomed to repeat it.” The essence of that pithy commentary is mostly attributed to author and thinker George Santayana. I do not suppose it’s often utilized to the inventory market, however it must be, and taking a look at historic charts is one of the best ways to be taught from historical past.
I’ve regarded on the 1929-1932 Bear Market chart many instances during the last 40 years, however it was at all times with an emphasis on the 1929 Crash and the almost -90% decline into the 1932 backside. Not too long ago, I noticed that there was one thing else simply as fascinating and added new annotations to the chart. If we assume {that a} decline of over -20% is a bear market, and an advance of over +20% is a bull market, it’s stunning methods to understand how complicated that interval will need to have been for traders. The decline from the 1929 prime to the 1932 backside was a secular bear market, but in addition inside that interval there have been six cyclical bear markets and 5 cyclical bull markets. Eleven reversals in 32 months!
Do I believe we’re in for a thrashing of this magnitude? Nicely, keep in mind that in the course of the 2000-2002 Bear Market the Nasdaq Composite declined about -80%, and the Nasdaq 100 (QQQ) about -85%. No person is aware of what is admittedly going to occur, however the Nasdaq Composite and Nasdaq 100 are already down -32%, and it’s nicely to keep in mind that, relying one’s publicity, catastrophic losses aren’t simply myths relegated to the dangerous previous days. As for whiplash reversals like these on the chart, it’s too quickly to inform, however the 2020 Bear Market demonstrates that it’s not out of the query.
— Carl Swenlin
Technical Evaluation is a windsock, not a crystal ball. –Carl Swenlin
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Carl Swenlin is a veteran technical analyst who has been actively engaged in market evaluation since 1981. A pioneer within the creation of on-line technical assets, he was president and founding father of DecisionPoint.com, one of many premier market timing and technical evaluation web sites on the net. DecisionPoint makes a speciality of inventory market indicators and charting. Since DecisionPoint merged with StockCharts.com in 2013, Carl has served a consulting technical analyst and weblog contributor.
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