Monday, January 17, 2011

Crash after 8 years ? The crash of 2002/2003 and you add 8 years......

Interesting point in this story from the technical analysis chat room by Ed Carlson, CMT of Seattle Technical Advisors:

"As part of my research for my book on George Lindsay, I was reading his newsletter from 5/21/71 last night. It appears (to me) to apply to our current situation.

If we count, not just from an ordinary bear market low, but from a really epochal bottom, there has always been a sharp break eight years later - a break so deep and rapid we can say that both an important high and an important low came within two or three months of each other. The crash of 1929 came eight years after the 1921 low. Eight years after the all-time low of 1932, the market really plummeted in May-June 1940, when Germany invaded France. The low of 1942 marked the end of a five year bear market, and stocks plunged in June-July 1950, when the Korean War broke out. The break of 1957 came eight years after the major low of 1949. When we count eight years from the low of 1962, we come to the spring of 1970., and again the market took a nosedive.

Note that the break can occur at any stage of the market cycle: in 1929, it came at the top, in 1940 during a bear market, in 1950 during a bull market and in 1970 at the bottom. It makes no difference. "

I'd say our last epochal bottom was late 2002 or early 2003 which makes the eight year count end................... Help......  excuse me, I need to call my broker."

Those who follow our work will recognize the cycles at work here.

Geir Solem
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