Is a Massive Head and Shoulders Pattern Completing: Just Like On the Eve of the Second Wave Down in the Great Depression?
by ilene - July 5th, 2010 6:21 pm
Is a Massive Head and Shoulders Pattern Completing … Just Like On the Eve of the Second Wave Down in the Great Depression?
Courtesy of Washington’s Blog
In January 2009, I pointed out:
The Telegraph’s lead economic writer, Ambrose Evans-Pritchard, has an interesting article arguing that we are in 1931-like conditions:
- A big crash has already happened
- Things are very gloomy
- But we haven’t been hit by the biggest crash, the "second leg down" which didn’t end for a couple of years
What’s he talking about?
Well, look at this chart:
(click here to see full image).
As you can see, the 1929 crash was actually very small compared to the "second leg down" crash which didn’t end until 1932 or 1933.
According to Elliot Wave and other chartists, a second – bigger – crash is on its way, just like Evans-Pritchard is warning.
Today, CNBC is reporting:
The Dow Jones Industrial Average is repeating a pattern that appeared just before markets fell during the Great Depression, Daryl Guppy, CEO at Guppytraders.com, told CNBC Monday.
“Those who don’t remember history are doomed to repeat it…there was a head and shoulders pattern that developed before the Depression in 1929, then with the recovery in 1930 we had another head and shoulders pattern that preceded a fall in the market, and in the current Dow situation we see an exact repeat of that environment,” Guppy said.
(Robert McHugh is saying the same thing.)
And yesterday, Evans-Pritchard gave an update on macroeconomic trends in an article entitled "With the US trapped in depression, this really is starting to feel like 1932":
"The economy is still in the gravitational pull of the Great Recession," said Robert Reich, former US labour secretary. "All the booster rockets for getting us beyond it are failing."
"Home sales are down. Retail sales are down. Factory orders in May suffered their biggest tumble since March of last year. So what are we doing about it? Less than nothing," he said. [You can read the rest of Reich's essay here]
California is tightening faster than Greece…. Can Illinois be far behind?
***
Roughly a million Americans have dropped out of the jobs market altogether over the past two months. That is the only