Thursday, August 12, 2010

A Telltale Chart?

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In his interview with Bloomberg (3:30 minutes in) yesterday, Robert Prechter mentioned that the stock market was correcting in a pattern comparable to right before the October 1987 stock market crash. Curious about this, I've created a chart that shows the parallel:

Here's the complete crash pattern in 1987:

The timescales are different, but as market analogies go, if this pattern holds true then the stock market is within days or weeks of an '87-style stock market crash. (That this may be the case is also suggested by a "Hindenburg Omen" which just occurred.)

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