Based on data going back 90 years, whenever the 12-month rate of change (ROC) in the Dow Jones Industrials Average has exceeded 40 percent, it has generally signaled trouble ahead.
In three cases, a 12-month ROC above that level has only marked a short-term pause, after which the market traded higher.
But on 11 other occasions, similarly rapid advances have been followed by notable corrections, including the collapses that followed the 1929 and dot-com era peaks, as well as the 1987 crash.
Given those odds, increasingly exuberant bulls might want to have a rethink.
Did you know that writing service furnished people with the excellent written essay just about this topic. But your note could be at the peak point of students’ evaluation.
Posted by: MEADOWSAda29 | March 31, 2010 at 01:11 PM
I subscribe to the FFT newsletter at http://www.forecastfortomorrow.com that guy is calling for a bigger event to come in the next few months. If you look back he has been spot on with things over many years, and someone that should be listened too!
IMHO this greece debt thing and commercial real estate thing could be the next thing to blow up in the US governments face. Time will tell.
Posted by: Tony smith | March 31, 2010 at 06:59 PM
Thanks for the heads up. http://paynecapital.blogspot.com
Posted by: Andrepayne1 | March 31, 2010 at 08:37 PM
Check out this link for a different take on this: http://thetechnicaltakedotcom.blogspot.com/2010/03/different-take.html
Posted by: Guy M. Lerner | April 01, 2010 at 09:05 AM
The only serious down trend on the chart is at 1929. This chart looks like a buy and hoder's dream!
Posted by: Chris | April 04, 2010 at 04:52 PM
I suppose if your investment timeframe is 100 years then it looks like a holder's dream. But reality is that most people have a horizon of some twenty years at best (start saving for retirement at 55 and live to 75).
Posted by: J Lee | April 05, 2010 at 12:20 PM