For past few days, as every other analyst on the financial street, I am trying to figure out when this turmoil going to come to end .. or whether there is some steam left in the sell off's we have witnessed globally ..
Incidentally I pulled up the charts of S&P and Dow Jones since 1990 and tried to figure if one could draw any conclusions from these weekly charts ... .
So here's the chart for S&P 500. It has seen two major falls in the past 18 years ... one was when the S&P peaked in 1998 and we had the russian bond crisis and the crisis of asian currency. The fall had lasted for nearly 4 years ... obviously this peiod had 9/11 happening as well dampening the spirits in the market. Interestingly look at the recent fall on the extreme right you may see the the velocity of the fall has been far more striking .. in just one year (from July 2007 to Sept 2008) we have had a fall similar to 4 years during 1998 to 2002. S&P is now approaching a very important support level of 800 ... if this support gets taken out ... the double top suggest that we may fall another 700 points...
Similiar is the story for the dow jones index as . The index had a trend upwards since the begining of Dec 1993 till 1998 and then a consolidation during 1998 to 2002. A strong trend again from 2003 to 2007 before finally reversing in July of last year. I fear based on the chart that INDU may go down to 7300 levels and may be there's a big support waiting for us then ..
These two charts indicate that we are very close to important supports and if we break these ... may be thats gonna be the end of the finance world!!
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