The Great Depression, Part 2: Will The Future Follow The Past?

Includes: DIA, SPY
by: David Fry

I certainly won't be the first person to offer comparisons to the Great Depression of the 1930s with what's occurring now. But for sake of argument the patterns and even the seasonal dates are quite similar.

Election cycles are similar while the structure of the Dow Jones Industrial Average is quite different with just a few companies then even existing today. Nevertheless history can repeat and we don't have another market to compare current data to.

The monthly chart from the 1930s extends far beyond what we can offer now and we're not even attempting to be clairvoyant. One observation and conclusion is during the 1930s there were great rallies followed again by major declines. This made the rise in 1933-36 for example just an impressive bear market rally.

That said chart patterns are stunningly similar made more so by today's news the eurozone has entered another recession not seen since 2009. With the world highly interconnected economically and many global market indexes well-correlated one to another makes these chart views more than just a little interesting.

(Click to enlarge)

(Click to enlarge)

Draw your own conclusion from these views and we'll have to wait and see if the future follows the past.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article.