As of 06/01/2020
  Indus: 25,475 +91.91 +0.4%  
  Trans: 8,966 -3.88 0.0%  
  Utils: 815 +8.41 +1.0%  
  Nasdaq: 9,552 +62.18 +0.7%  
  S&P 500: 3,056 +11.42 +0.4%  
YTD
-10.7%  
-17.8%  
-7.3%  
 +6.5%  
-5.4%  
  Targets    Overview: 05/29/2020  
  Up arrow27,000 or 24,000 by 06/15/2020
  Up arrow9,800 or 8,200 by 06/15/2020
  Up arrow850 or 750 by 06/15/2020
  Up arrow9,800 or 9,000 by 06/15/2020
  Up arrow3,200 or 2,850 by 06/15/2020
CPI (updated daily): Arrows on 5/15/20
As of 06/01/2020
  Indus: 25,475 +91.91 +0.4%  
  Trans: 8,966 -3.88 0.0%  
  Utils: 815 +8.41 +1.0%  
  Nasdaq: 9,552 +62.18 +0.7%  
  S&P 500: 3,056 +11.42 +0.4%  
YTD
-10.7%  
-17.8%  
-7.3%  
 +6.5%  
-5.4%  
  Targets    Overview: 05/29/2020  
  Up arrow27,000 or 24,000 by 06/15/2020
  Up arrow9,800 or 8,200 by 06/15/2020
  Up arrow850 or 750 by 06/15/2020
  Up arrow9,800 or 9,000 by 06/15/2020
  Up arrow3,200 or 2,850 by 06/15/2020
CPI (updated daily): Arrows on 5/15/20

Bulkowski on Crash of 1929

 

Below is a review of what is termed the crash of 1929 from a technical analysis perspective. I show the chart full size because when I reduced it, it looked like...well...terrible. So you will have to maneuver up and down. Sorry about that.

Picture of the crash of 1929 and following

A broadening top appeared in early 1929, but this did not have bearish implications. In fact, the partial decline at point A was bullish. The Dow broke out upward from the chart pattern, leading to the peak at B.

Look at the inset, the blue box. This is on the daily scale while the rest of the chart appears on the weekly scale. The head-and-shoulders top chart pattern is obvious even though the shoulders are a bit muted. They remind me of a big chicken with small wings. Anyway, the head-and-shoulders top, when confirmed by price piercing the neckline (F) or closing below the right shoulder low (red dashed arrow), suggested the market was going down.

And down it went. The drop from B to C took the index from a high of 386.10 on September 3 to a low of 195.35 on November 13. That is a drop of 49% in just over two months. But that was just the start of the decline.

A pipe bottom signaled a recovery until mid April when the Dow turned down again (D). The decline was not a straight-line run, but on this scale, that did not matter much. A descending scallop broke out downward, suggesting additional declines. A second pipe bottom indicated a recovery, but it did not last long.

The index bottomed in July 1933 at a low of 40.56. From the peak at B to the low at E, the Dow dropped an astounding 89%! The crash of 1929 was quick and severe, but the bear market that followed made things much worse.

Not shown in the above chart, but once the decline finished, the Dow doubled in two months and formed a high and tight flag that never confirmed. The Dow dropped back and formed an ugly double bottom and then began a long recovery.

-- Thomas Bulkowski

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See Also

 

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