Thursday, October 13, 2011

Another Similar 2008 Chart Pattern

“He observed that human emotions collectively had major impacts on the movement of stock prices and markets in general, ultimately creating patterns that kept repeating.” - From a book on Jesse Livermore’s trading style. Without a doubt one common similarity between the current market and the fall of 2008 is heightened investor emotions. There are plenty of other similarities from bank nationalizations, a deteriorating global economy and government intervention.

Marc Faber: Long The Dollar, But Occupy The Federal Reserve
Marc Faber, asset manager at the Gloom, Doom & Boom Report, popped in at CNBC (Clip Below) on Oct. 11 while visiting in Montreal, Canada (He is usually based in Thailand.). Faber expects volatility to continue (not necessarily mean a downside to the market), but dollar should be a long trade as whenever there's a bubble, e.g. tech bubble, housing bubble, stocks bubble, and commodities bubble, usually after the bubble bursts, there typically will be a 10-15 years of volatility before markets settle down to reignite an uptrend.


A Chartbook of 3 Financial Market Crises
Everybody is asking where to now with the global financial markets. I thought it was worthwhile comparing the current behavior of the financial markets with the two recent crises, namely the great financial crisis of 2008/2009 and the minor one in 2010 when the sovereign debt crisis in the Eurozone developed. I have charted the series starting with two months before each crisis developed and ended the series 11 months later. The respective series are as follows:
    * 2008 crisis: July 2008 to July 2009
    * 2010 crisis: February 2010 to February 2011
    * 2011 crisis: from May 2011


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