$SPY $DIA $UVXY The Roaring 20's, at first glance you can see why. The Bull market had an unprecedented run. You only needed money to put it in the market, Wall St was a money making machine. If you didn't have money, just ask for a loan, the profits could pay off the loan+interest and still have a juicy yield. Evidently this created a bubble, the biggest one in the history of the Stock Market so far. Greed is everything, and the more you get the more you want, that's human nature, and just like Livermore used to say, that never changes, that's why patterns repeat. There's a time when simply there's no more money to lend, and it's obvious, if there is no money there are no bids, if there are no bids there's no speculative profit and the traders are out. Oh surprise! no bidders, at the ask price, try a lower ask price, margin calls and the shares are liquidated at market price. There are only two winners in this scenario, the Bears who knew when to short sell or had a lucky timing, and the institutions who took profit when they could, and not when they had to. The rest of the story we all know it, depression, bankruptcies, massive lay offs, and endless years and years to recover.
The Bull run was from 1921-1929 and the Bear market was from 1929 until 1932. If you remember 2009, it was the end of the Bear market, but the "recovery effects" in main street started to be perceived around 2010-2011 when main street could finally start feeling confidence in the market and the overall economy. Perception is a lagging indicator, both in the bull run and the bear market, always.
That Roaring 20's market was awesome, the big leg from bottom to top was almost 500%. It had four main segments, each one around 60% with a retracement, which was absolutely bublelicious ! No doubt everybody wanted to be fully invested in the Stock Market back then. The stochastics indicator was mostly in Overbought levels, the momentum indicator flagged a negative momentum divergence around 1928, which evidently was a neglected sign, by the way they didn't have these indicators back then, they used paper, pencil, moving averages, point and figure and tape reading. I am just trying to use modern indicators to get a glimpse of the overextended conditions that precluded the epic fall of 1929. The Fibonacci Support/Resistance levels show a limit at 1.618 Fib level, it was a bit overextended at the top and then a retracement back to 0.5Fib (50%) a short covering rally and the meltdown. Currently the indicators are at 1.618 Fib level. Could it be it? Maybe, probably a short run to exit positions, new ATH and the party is over.
All green up and heading to the Moon to infinity and beyond. Well I don't blame them. When the music stops the party is over. In this case not only the music, the lights, the food, the tables, the chairs, the walls, disappeared. In one single month the market retraced 50% from the top. That was not a correction, that was a financial massacre. Shortly after the epic fall it tried to recover, but basically it was just short selling covering and the so called "Illusion of going back to normal", also known as a dead cat bounce. Once the short sellers took profit and the savvy investors took advantage of the liquidity to exit their positions the blood shed continued until it was all gone, literally, all gone. There were about five bearish waves due to short covering, and profit taking.
It was until late 1932 and early 1933 when the market went from oversold to the accumulation phase. Until 1934 there was more confidence (actually institutions who knew well, not main street) and the market resumed a bull cycle. Not the Roaring 20's style, more like a pre-20's level. People who lived the 2008 financial meltdown still live with that mental scar. I cannot imagine what went through our predecessors' minds back then. That generation is all gone, and just because there is no living memory of the events it doesn't mean this time is going to be different.
The Bull run was from 1921-1929 and the Bear market was from 1929 until 1932. If you remember 2009, it was the end of the Bear market, but the "recovery effects" in main street started to be perceived around 2010-2011 when main street could finally start feeling confidence in the market and the overall economy. Perception is a lagging indicator, both in the bull run and the bear market, always.
That Roaring 20's market was awesome, the big leg from bottom to top was almost 500%. It had four main segments, each one around 60% with a retracement, which was absolutely bublelicious ! No doubt everybody wanted to be fully invested in the Stock Market back then. The stochastics indicator was mostly in Overbought levels, the momentum indicator flagged a negative momentum divergence around 1928, which evidently was a neglected sign, by the way they didn't have these indicators back then, they used paper, pencil, moving averages, point and figure and tape reading. I am just trying to use modern indicators to get a glimpse of the overextended conditions that precluded the epic fall of 1929. The Fibonacci Support/Resistance levels show a limit at 1.618 Fib level, it was a bit overextended at the top and then a retracement back to 0.5Fib (50%) a short covering rally and the meltdown. Currently the indicators are at 1.618 Fib level. Could it be it? Maybe, probably a short run to exit positions, new ATH and the party is over.
All green up and heading to the Moon to infinity and beyond. Well I don't blame them. When the music stops the party is over. In this case not only the music, the lights, the food, the tables, the chairs, the walls, disappeared. In one single month the market retraced 50% from the top. That was not a correction, that was a financial massacre. Shortly after the epic fall it tried to recover, but basically it was just short selling covering and the so called "Illusion of going back to normal", also known as a dead cat bounce. Once the short sellers took profit and the savvy investors took advantage of the liquidity to exit their positions the blood shed continued until it was all gone, literally, all gone. There were about five bearish waves due to short covering, and profit taking.
It was until late 1932 and early 1933 when the market went from oversold to the accumulation phase. Until 1934 there was more confidence (actually institutions who knew well, not main street) and the market resumed a bull cycle. Not the Roaring 20's style, more like a pre-20's level. People who lived the 2008 financial meltdown still live with that mental scar. I cannot imagine what went through our predecessors' minds back then. That generation is all gone, and just because there is no living memory of the events it doesn't mean this time is going to be different.
