The Dow Crash Comparison

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Futures and options trading contain substantial risk of loss and may not be suitable for all investors.

What we wanted to show here with the charts above is a comparison of the Dow Jones during its bear market rally following the 1929 crash to that of this recovery rally witnessed since the low of March 2009.

We find it quite interesting and perhaps at this point in time still coincidental that the recovery off the 1929 low retraced just slightly more than 50 percent of the distance from the 1929 high to the crash low which so far is virtually the same percentage the Dow has achieved in its current recovery from the October 2007 high to the March 2009 low.

From that recovery high in 1930 the Dow Jones proceeded to fall by a larger amount than it did in the initial wave of the ’29 crash finally bottoming in 1932.

We are not prepared to say that the exact same scenario is about to play out. It is however curious and interesting that this recent nine month recovery achieves virtually the same percentage basis up to this point as it did in 1929. It has been less than a full week since the recovery high has been made but this is something that we felt worthy of mentioning in this space.

It is also interesting to note that the S&P 500 fell roughly just 2 points shy (1119.13) of reaching what would be its 50 percent retracement (1121.44).

Recent news events to keep in mind are those surrounding what may be turning in to a global debt crisis. The Dubai news and more recently downgrades to Grecian debt and that of the state of Illinois here in the U.S. Where will it end? Is it just starting is perhaps what should be of concern.

The good thing about the futures markets, which is our area, is that an investor or participant can be either long or short. Long when he believes prices will rise and short when he perceives prices will fall.

We can help you with this.

Good trading

Jeff
CB&S