After a record-setting 2013, the stock market has been undergoing a correction process that has already seen trillions of dollars lost. A new chart is making its way around the Internet that shows remarkable parallels between the Dow Jones Industrial Average leading up to the 1929 crash and today. On radio this morning, Glenn discussed the disturbing trend.
“This one is a little bit uncomfortable. This is a two-year chart. And it shows the two years leading up to the 1929 crash of the stock market… It is almost exact,” Glenn said. “And the good news is, we’re just at the place now where it’s going to come down rapidly. No, but the good news is, you know, we’ve got probably six or eight months before it would crash or not crash.”
Market Watch’s Mark Hulbert believes that if market follows the same script, trouble lies directly ahead. He writes:
There are eerie parallels between the stock market’s recent behavior and how it behaved right before the 1929 crash.
That at least is the conclusion reached by a frightening chart that has been making the rounds on Wall Street. The chart superimposes the market’s recent performance on top of a plot of its gyrations in 1928 and 1929.
The picture isn’t pretty. And it’s not as easy as you might think to wriggle out from underneath the bearish significance of this chart.
“If this chart were to hold up, [the Dow] would drop from over 16,000 where it is now to somewhere into the 12,000s it looks like,” Stu observed. “That would be significant.”
While the trends on the chart offer a frightening glimpse into what the future could hold, Pat found a bit of a silver lining.
“Although that’s not as dramatic a crash as some are predicting,” Pat said. “Some have said 4,000 and 5,000. It’s a brighter picture.”
“Thank you… [it’s really] not bad,” Glenn quipped. “I was expecting the Dow to be like closing at 4 today.”