The article below on the financial parallels between the 1920’s financial markets and today’s markets, discusses comparisons between moves in the commodities, bond and eventually, the stock market. Continue reading below to see how they followed each other, how long between each move, and the directions they consecutively followed.
Stocks Peak One Year After Bonds (History Set to Repeat?)
By Elliott Wave International
When the financial media mentions the late 1920s, they usually mean the 1929 stock market top. But today’s investors can also learn from what happened in 1928. That was the year that the bond market topped, while commodities peaked even sooner.
You can see this for yourself in a chart published in the September 2013 issue of Robert Prechter’s Elliott Wave Theorist.
In the deflationary collapse of 1929-32, commodities fell
from lower peaks, not higher peaks; stocks fell
from all-time highs down to the bottom; and bond
prices fell from an all-time high a year earlier.
The Elliott Wave Theorist, July-August,
These markets could see a similar outcome in the near future: Commodities peaked in 2008, while Treasury bonds topped in 2012. The high in the Dow Industrials remains December 31, 2013.
Of course, history doesn’t always repeat itself. Whether December 31 proves to be a long-term high in the Dow remains to be seen. The stock market rally since March 2009 has been doggedly persistent. Prices have surged several times just as the indicators suggested the uptrend was over.
Bad Start for Stocks in 2014: Buying opportunity or more pain to come?
With this information, his Elliott Wave Theorist subscribers are now prepared for 2014. And you can be,