The Dow Jones Industrial average was the most important index in the 1920's as the nation industrialized. Today the spotlight is more on the S&P. The similarities between both bubbles is striking, both visually and from a TA standpoint. Although we have seen more violent pullbacks due to excess leverage and world events, the paths are nearly identical. The S&P has respected the same fib levels as resistance and similarly timed (although more violent) pullbacks as in the 1920's bubble. Most people seem bearish and the economic environment is certainly not a tailwind right now but this chart comparison is striking. Currently we are seeing the more violent pull back from the inflation and rising rates but the S&P is going higher. The comparison priced in the 2008 recession, the COVID dump, and I believe it will prove itself accurate again by ripping higher into a final parabolic move. Although the gyrations are not identical, it is eerily similar. Our current pullback is deeper but we will see the SP near 5700 by the end of the year or sometime 1st quarter next year. I lean towards the end of the year because selling pressures for tax purposes will be strong (especially with a doubling of IRS agents).
Tell me what you think.
Tell me what you think.