Saturday, August 23, 2014

Is History About to Rhyme?

The Market Trend Model (http://bitly.com/M_Trend_Model) continues to show a positive bias as the major indices remain in uptrends. While the market flirts with 52-week highs, it should be noted that weekly volume was the lowest in four weeks and well below average.  Also of note, the performance of the Russell 2000 continues to significantly lag behind other market indices.

The low volume grind to new highs is a warning sign that these price levels may not be sustainable, yet QE driven liquidity has thwarted bears time and time again.  It is entirely possible the market makes one more parabolic push as the Federal Reserve nears the end of QE in October.

Looking back at history, it is almost unbelievable the "Black Tuesday" stock market crash occurred in October 1929 and today the market is watching for what the Federal Reserve will do in October 2014.

Back in 1929 the London stock market crashed in September, a full month before the New York stock market crash.  Just yesterday Mario Draghi all but said that European efforts to curb deflation and stimulate growth have failed.

Is it possible that September - October 2014 plays out like September - October 1929?