Talk is now circulating in financial quarters of a new “mini-bubble” in the making. Apparently the unbounded rise in the stock market is reviving fears of another collapse like the one suffered last year. Another reason that the “hated rally” has sparked fears is that we’re about a year removed from the final “hard down” phase of last year’s 6-year cycle collapse. September 2008 witnessed the financial markets crater and the intensity of last year’s fear was unmatched in our lifetime. Not even the 1972-74 bear market, which was the worst since the Great Depression, witnessed a comparable level of fear.
W.D. Gann used to emphasize the importance of anniversary dates when it came to financial market analysis. The 1-year anniversary of an important market event is by far the most pivotal such date since the collective memory of the investing public is rather limited. Most market participants can still vividly recall the “great unwinding” of September-November last year. The vividness of that primal fear is still strong, hence the reason for the widespread expectation of another crash.
W.D. Gann was correct to attach importance to anniversary dates and he was familiar with the “echo” effect of the investing public’s psyche in response to major market events. The intense fear of 2008 has been gradually eroding all year and while a measure of fear is still discernable today, it will be eventually replaced by something akin to enthusiasm at the next major top.
www.clifdroke.com
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