Bottom should be around 27 per cent below “bailout bounce” according to analyst
Paul Joseph Watson
Thursday, October 16, 2008
A comparison of the current Wall Street crash with the events of 1929 shows that the Dow has at least another 27 per cent drop below the bailout bounce before it bottoms out, despite another rout yesterday after which the Dow had lost over 700 points.
“In 1929 we saw a two day rally of almost 19 per cent followed by a decline of 6 per cent and finally from the recovery high we lost 27 per cent,” Edward Loef from Theodoor Gilissen Bankiers told CNBC this morning.
That two day spike has been replicated by events at the start of this week before the Dow crashed again yesterday and is set to suffer again today.
A comparison of the two charts indicates that the Dow has not bottomed out, as many traders are claiming.
At least one more significant plunge is anticipated.
“If you look at the Dow Jones index in this context we’ve seen also a two day rally which managed to recover almost 24 per cent from its Friday low and yesterday we saw renewed selling pressure so I think when history is our guide you should expect another decline until we have a bottom of 27 per cent below the recent bailout bounce, which I expect will be by the end of next week because the new lows in 1929 was in duration 7 days since the bounce we saw then and now,” said Loef.
Loef’s predictions have proven accurate in the past. On September 18th he predicted that the Dow would sink to 8,0000 within a month at a time when it was around 11,000. The Dow has just another 500 or so points to fall before Loef is proven accurate in his forecast.
U.S. stocks dropped the most since the 1987 crash yesterday after a report confirmed the economy had suffered its biggest drop in retail sales in three years.
This article was posted: Thursday, October 16, 2008 at 4:55 am