Fascinating stock chart

[Baylor3217]

http://www.marketwatch.com/story/scary-1929-market-chart-gains-traction-2014-02-11

Regardless of political affiliation, we will all be affected (and have already to the positive) by runaway unprecedented and reckless spending.

One has to wonder how it will all play out and how to defend / profit from it.

[matchewed]

I hear tarot card reading is just as accurate.

[Baylor3217]

I hear tarot card reading is just as accurate.

Because evaluating charts and balance sheets are the equivalent of tarot cards.

[Russ]

Because evaluating charts and balance sheets are the equivalent of tarot cards.

that was the joke, yeah.

If you're just being sarcastic, I expect you plan on going 100% cash soon?

[dragoncar]

I hear tarot card reading is just as accurate.

Because evaluating charts and balance sheets are the equivalent of tarot cards.

Who said anything about balance sheets?

[KingCoin]

Even if you assume stock patterns echo through time (there's no evidence that they do), watch out for games with the Y-axes. The Dow rose about 90% in the year pre-crash in 1929 vs only 25% in the current period. So, at the very least, the magnitude of gyration is much smaller.

It's very easy to mine the data for parallels like these and I've seen thousands of them over the years. Websites like zerohedge.com have been using them to assert that disaster is just around the corner for the last 5 years. For better or worse, they're almost never useful for predicting future moves. They tend to break down almost as soon as you notice them. 

[the fixer]

This is just more silly technical analysis. It's not even worth refuting. The only thing they're trying to push is that the market has continued to follow a trend that the chart predicted in November. Try flipping a coin and making a chart based on the cumulative heads-tails tosses, and see how often you get a chart that looks exactly like the part going from November to now. It will happen more often than you think. It's just random.

[AccidentalMiser]

As KingCoin stated, a market getting cut in half (from 400 to 200) is not the same as it falling from 16400 to 13200. 

Fundamentals drive technicals.  The fed pumps in billions of dollars per month with near zero bond rates, the market goes up.  In 1929, regular folks didn't have 401ks which dump billions more dollars in cash into the market month in and month out.  The gold standard has gone the way of the dodo. 

The charts (plotted on totally different axes) may look similar but the reasons behind them are not remotely comparable.

None of this is to say we won't have a correction tomorrow or next week or next month.  It is to say that I'll just keep buying until I die.  At Dow 8000, I just get twice as many shares every week.

[Eric]

I'm curious how you read that article claiming that history will repeat itself because these lines on a graph said so and concluded

Regardless of political affiliation, we will all be affected (and have already to the positive) by runaway unprecedented and reckless spending.

You realize that the article makes no mention of any fact whatsoever.  It doesn't mention government spending, corporate spending, profits, incomes, savings, investments, debts, deficits, politics, or anything else that could be used to draw your conclusion.  Claiming the Cubs will win the World Series next year because of that article would seem to be just as relevant.

[the fixer]

Chartists don't want facts, they think it distracts them. Their idea is that they know what the market is going to do purely by analyzing past performance in an isolated room with no windows or other outside interventions. They're nuts.

[matchewed]

I hear tarot card reading is just as accurate.

Because evaluating charts and balance sheets are the equivalent of tarot cards.

I'm not sure we read the same article. It mentioned balance sheets? Please let me know where in the article it mentions balance sheets, because I can't even find the word balance in it.

Looking at charts and predicting the future off of two distantly related scenarios (only related because they're the DJIA other than that no relation) is a craptic (get it crap and tactic) method of scare tactic analysis. This kind of article is supposed to drive fear based decisions which can cost people. I have no respect for that kind of financial "journalism."

I call it tarot card reading because it is bullshit that someone thinks they can predict the future. Might as well slaughter a chicken and spread the guts around to see if it will rain. Or you know actually study finance and realize that unless you've got the time/money/skill your best bet is just DCA into low cost funds that match your AA. Or you could also study charts to see if it will rain... I mean if the market will crash.

[Baylor3217]

I personally like to evaluate scenarios that can lead to extreme results. Some blindly buy an hold and some are extremely active. I'm probably more towards the buy and hold camp but not blindly and we are certainly in very unusual times (as we have been many times in the past).

The chart is simply interesting. I'm much more concerned about debt and deflation and cultural issues as it comes to willingness to work and unfunded entitlement and how it may effect what I've worked very hard or. To that end, I enjoy staying informed and sometimes making decisions accordingly.

[Cheddar Stacker]

http://www.marketwatch.com/story/scary-1929-market-chart-gains-traction-2014-02-11

Regardless of political affiliation, we will all be affected (and have already to the positive) by runaway unprecedented and reckless spending.

One has to wonder how it will all play out and how to defend / profit from it.

You still didn't answer the question a few people asked - What does this bold part mean??? Is the government recklessly spending? Is the general population recklessly spending? How does this statement relate to the chart?

I agree the chart is interesting, and if we have another great depression I will come back to this forum and give you a tip of the cap for bringing this to my attention, but I'm not gonna run and hide. If nothing else, it will be a good time to accumulate some major shares that will be on sale.

[matchewed]

Fair enough but what does that chart have to do with what you just said?