|Dow Jones Industrials 1920-1943|
At the peak of the market in 1929, the song Happy Days are Here Again was copyrighted. After the initial market crash in 1929, the market rallied into 1930 – at the peak of that rally, the song Chasing Rainbows was quite popular – thus showing the incredibly positive mood that was just 3 years away from the bottom of the worst depression in the country’s history … and some argue that history doesn’t repeat itself.
The current sentiment is highly favorable and the news that is getting the attention from the talking heads is positive – for the most part. The chart below shows what happened during a similar period where the economic background was failing, but the mood was positive … for awhile. What followed was historic. The point to keep in mind was that investors at the time believed the worst was over and the bottom was in with the low made in 1929. It wasn’t.
|S&P 500 Major All Time Tops|
Is the US Dollar about to rally? Rumor has it the bullish consensus has dropped to 3%. 3% isn’t 2%, but it is pretty low. There is nothing in my work yet that says the US Dollar is reversing, however, one would think that it is getting close to at least have a rally … if not a move that lasts for awhile. It should be fun to see.
A final note as of noon 10/19/2010: Peter Eliades (Stockmarket Cycle Management, Inc.) just called and pointed out that the NYSE Advance/Decline line (based on TradeStation) just double topped with its prior high on June 4, 2007 which led into the orthodox July top in 2007. This should be a very interesting week indeed.
CFRN Contributing Columnist
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