1928-1929 stock market chart

[Grudgie]

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



I remember seeing this chart back n November. Since then it has moved eerily close to the 1929 chart right before the crash. Also remember the market had a chain of Hindenburg Omens a few months back.

http://en.wikipedia.org/wiki/Hindenburg_Omen

[brat]

Wow...... 

[JohnyMac]

Yeah Grudgie I saw this awhile back and then again yesterday. I agree with your comment, "Since then it has moved eerily close to the 1929 chart right before the crash."

IMO, I think when she drops she will correct to the 40-50% level not the 15-20% level at the chart shows. Remember that the stock market in 1929 was ~50% of the market high. So a DJIA of ~8,000 - 9,500. This would be still better than 2009's low of ~7,100 in February.

Now of course what will happen is that President Obama will scream that the market is a bad place to invest your retirement and the US Government should take over your 401K AKA MYIRA. PBS also has a great article on this.

Getting back to the market, will this correction also cause a run on the bank (s)? We will see.

[Well-Prepared Witch]

I've seen that chart, too, but I haven't researched it to see if it's accurate.  However, while I think a financial collapse is entirely possible (if not probable!), I will say that there's a lot in place now that wasn't in place in '29.  Namely, they freeze trading when things drop too much too fast.  This allows them to "contain" any major problems. 

[JohnyMac]

Yes Wellie, the NYSE does have "circuit breakers" for if the market is to hot or cold.

A market can be suspended trading for a few hours or for the day. If trading is suspended for a day, the market, by law, must open the following day. The circuit breaker is a % of the market medium from the previous day.

So lets say that the circuit breaker is 10% and the DJIA medium from yesterday was 15,900. Once the market dropped 1,590 points in one day, the circuit breaker would open and trading could be suspended for hours or closed for the day.

But remember, if trading is suspended for the day the market must open the next day, albeit at 14,310 (15,900 correction x 10%= 1,590 - 15,900=14,310). This procedure allows for a "cooling off period."

With that all said, the market could loose 10% a day for X days. So in theory it would take 4-5 days to reach a 40% correction if the circuit breaker was 10%. I am sure The Fed would jump in at some point to spend your dollars to shore up the market, e.g. make buys.

Just some food for thought.

[CrystalHunter1989]

We'll see...