1937 vs 2007 Crash Comparison Update (by TheInflationist)

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For new readers, here are our previous posts comparing 1937 to 2007:

1. Using Fibonacci Numbers to Predict the Market

2. Comparison 1937 vs 2007 

Quick Update 1937 vs 2007 Bear Market Charts:

Bear Market Comparison Chart: 1935 vs 2007

(Blue: 1937 ; Pink: Current Bear Market; Y axis: percentage from top; X axis: number of days from start of bear market)

So are we at the first peak (A) or the second peak(B)? How far further can markets fall before the bulls will come in? We zoomed in to look at it closer:

1937vs2007comparison

Few points:

– More room to fall before rally

– Expect a decent rally after the fall – the H&S level drawn on chart is the obvious target. However, if markets decide to fall further, then the second lower H&S level (not drawn) will be the next short entry level. However, looking at previous tops, the subsequent rally will usually get quite close to the top. We aim to release some of our shorts if markets fall further this coming week, and re anchor additional shorts after market rallies. Our trades in the coming week will assume that the market has topped (ie with a stop at the previous high)

– A stop at previous high – based on A and B in 1937, markets on both occasions did not break above the top at the subsequent (contiguous) rally. This will therefore be a safe stop to have in the unlikely event that markets have not topped. 

– Our India NIFTY shorts remain the best shorts at this point. 

Have a great weekend fellow traders. We need to be rested before next week. See you in the battle field.