I thought I’d have a little fun comparing the highs and lows of the crash of 1929 to today. I’d love to say that I came up with a wonderful prediction, but alas I can’t even read palms (yet). So, to explain what I’ve done a bit the top section is from 1929, and the bottom from 2007. What makes comparing the two time series is that we have incomplete data for 2008 as it is still unraveling. For the 1929+ period I used the weekly timeframe whereas for 2007-2008 I used the daily. For illustrative purposes this shouldn’t be a problem.
I was mainly curious to see the relationship between time and price descent. As you can see from the Cumulative Days and % from start it only took 69 days for the Dow to crash (49.39%) starting 1929 and it took 365 days for the Dow to reach a (44.48%) decline starting October 2007. So, in comparison our crash has been slow and steady with the main sell-off occurring from August through October. The only reason we aren’t in further decline is because of a few recent rallies, however they are all over a very short period of time.
From about October 14, 2008 we have started to see huge swings in the market creating new highs and lows on a daily basis. These will eventually be normalized when we have more data, but this is crazy. Up 24.25% in 4 days, and then down (16.30%) in another 2. Granted these are from the highs and lows of the session and not the closing, but either way you cut it the market is bouncing all over the place.
Take the sell-off today during the last 15 minutes… The Dow was at 9358 and then fell off a cliff to close at 8990.96, a difference of 367 points in 13 minutes. 13 minutes and any gain was completely erased and we closed down from the prior session. WOW
Conclusion? Basicallly I wanted to demonstate that we are moving at an accelerated pace. Many think that we are going to see a rally over the coming months. I’m more in the camp that due to the volatility any gain because it occurs so swiftly will be shortly thereafter followed by another low.
Time will tell….