This post by MktMike has been promoted from StockTock Social.

It has been said before but perhaps we should start looking more towards the Nasdaq instead of the S&P. A few weeks ago my post got promoted to the main page showing the comparisons of the 1929 bottoming process to today’s price action. I threw out the idea whenever the market stayed in a triangle and failed to continue lower.

Looking back the Nasdaq seems to still be in a similar pattern to the old Dow Jones Industrial Index of 1929. The Nasdaq actually made new lows, completing wave 5 of 3. Additionally, I’ve charted the futures in my main analysis to get the entire movement included with volume (You can compare with the second part of the picture which I actually charted the NDX). The futures show a more realistic bottoming formation as the low was actually made a day later than the low made on the Nasdaq daily chart (by 13 pts). This is something you would have missed without the ability to chart the futures. Also many of the candles on the futures are red while the daily chart appears to be more green.

There are also volume patterns to be seen as volume peaked on the initial bottom but declined on the retest. On the move higher there was much lighter volume and this stayed consistent for several months. Volume actually declined the first months passing the bottom but as buyers started gaining more confidence volume started to pick up. It was not until the 50% retracement where volume was around the levels of the bottom. Of course this is when the market followed through on its decline back in the 30’s, leading to the depression and 90% losses. (More on this in second picture)

Even zooming out there are comparisons to be seen as the highs [early 2008] seemed to roll down, then back up [July], and then a crash to new lows.

My previous post I created fib retracements from the very bottom of 1929. I believe this picture below is a better representation going from the first low and not the retest. This shows prices retracing exactly 50%. I’ve also plotted my prediction based only on the previous pattern made. I do believe I’ve read the 4 year cyclic low is supposed to come in 2010 and not 2009. Perhaps we start off the year with Obama looking like he’s saving the markets but towards the end of 2009 we start our new more lower to test 2002 lows.