Bloomberg’s Chart of the Day:

>

>

Source:
Worst Dow Drop Since Election Meant Rally in ’33
Jeff Kearns
Bloomberg, Jan. 20 2009

http://www.bloomberg.com/apps/news?pid=20601109&sid=aTv4IsA.Y7t8&

Category: Markets, Technical Analysis, Trading

Please use the comments to demonstrate your own ignorance, unfamiliarity with empirical data and lack of respect for scientific knowledge. Be sure to create straw men and argue against things I have neither said nor implied. If you could repeat previously discredited memes or steer the conversation into irrelevant, off topic discussions, it would be appreciated. Lastly, kindly forgo all civility in your discourse . . . you are, after all, anonymous.

47 Responses to “Worst Dow Drop Since Election Meant Rally in ’33”

  1. Myr says:

    “Meant” is a very misleading word choice by the author. Someone should have replaced “meant” with “preceded.” I don’t think this needs further explanation.

  2. John Borchers says:

    When everyone is tossing bank common away as if its worth zero we must be close.

  3. toneybrooks says:

    Well, this is nice news and a happy chart that Erin Burnett would love.

    Problem is, 1929-1932 represents part of a “recovery equation.”

  4. Tom K says:

    So the pundits are compare Obama to FDR, the market is way down, so we create a chart and extrapolate an outcome based on a single data point. Is silly season officially here?

    By the way, here are some far more illuminating charts: http://www.nypress.com/article-19271-flat-n-all-that.html (you’ll need to scroll down)

  5. call me ahab says:

    @ Borchers- bank common is worth zero.

    Also- what would be the reason for a rally especially a 75% rally? I do not see anything on the horizon to believe that will occur- outside of just plain wishing it would happen. What would be the catalyst?

  6. DL says:

    By the time FDR took over, the bear market had gone much further in terms of both time and magnitude.

  7. algernon says:

    Tom K
    I think you are right…even about NUMBER OF ONE- EYED RETARDED FLIES IN THE STATE OF NORTH CAROLINA vs. LIKELIHOOD OF NUCLEAR COM- BAT ON INDIAN SUBCONTINENT chart.

  8. John Borchers says:

    Sorry if bank common is worth $0 so is all other common. All companies own some sort of financials.

  9. John Borchers says:

    I’ll go ahead and call the bottom is in on both the financials index and S&P500.

  10. call me ahab says:

    sorry- off topic but I can’t take it anymore. Does anyone think this Geithner selection for Treasury Secretary should be approved. I mean GEEZ he did not even pay back taxes that he was aware that were owed until he was selected by Obama. What a loser. If he can’t figure out to correctly file taxes, supposedly one of out nation’s finest and brightest than who can we expect to be able to correctly file their taxes. I would imagine that there are many Americans who worked at the IMF who did get it right, unfortunately they are not being selected to run the Treasury (and the Treasury’s underlings at the IRS).

  11. cfischer says:

    John,

    “All companies own some sort of financials”

    Huh??

  12. Thisson says:

    In my opinion, the bottom won’t be in until Citi, BAC, JPM and Wells Fargo common stock is priced for bankruptcy.

  13. call me ahab says:

    @ Thisson- exactly!

  14. Bob_in_MA says:

    What nonsense.

    Almost all assets bottomed in the Summer of 1932, equities, bonds, commodities and home prices, after falling for 30+ months.

    The DOW had fallen 90% from 1929.

    That’s the context of rise in equity prices in 1933, not what had happened since the election.

    Barry is a bright guy, but he has a soft spot for silly-ass charts that tell absolutely nothing.

    There is no road map from the past for us.

  15. Bob_in_MA says:

    John Borchers, you sound a lot like someone trying to convince themselves.

  16. wnsrfr says:

    I think this is just a counter-point to the “worst percentage drop on inauguration day” stat from yesterday…

  17. AmenRa says:

    It’s just another way to try and keep you in the buy and hold mentality. Another excuse for the MSM to create a false sense of hope for the markets. Stop comparing the current market action to previous actions. You can only find the bottom in hindsight.

  18. gfeirman says:

    Now that’s a chart! I’m surprised the market hasn’t gotten any lift from Obama’s Inauguration.

  19. km4 says:

    Geithner Apologizes for Not Paying Taxes, Urges Action on Economy

    Tim Geithner Too Close to Goldman Sachs to Be Treasury Secretary

    Net Net: So he will still favor Wall St over Main Street.

    Obama – your cred may take a hit !

  20. Thisson says:

    @AmenRa,

    So what, then, should we do? Assuming we are mere mortals that cannot time the market, what strategy can we adopt to avoid getting fleeced ? There’s a big risk of selling and realizing a loss, and then missing the rebound. At least for those of us with 30 year time horizons, who doubt that EVERY company will suck forever.

    Is it foolish to just dollar cost average into indexes to hold for a 30 year duration?

  21. John Borchers says:

    I’m backing up the truck.

  22. John Borchers says:

    Recommend XLF selling the Feb $9 call.

  23. AmenRa says:

    @Thisson,

    No one said you had to go long at the exact bottom. Why not just wait until the trend has changed? You may miss out on some of the upside but that’s better than getting long right before new lows are made.

  24. Lloyd says:

    No offense Barry because your website is fantastic and you offer up so many good points but I hate charts like this. No wonder CNBC is so worthless, it’s full of clowns that preached this stuff and mislead retail investors. I rarely ever hear that magic word: VALUATION. What were valuations back in 1933? They were a heck of a lot lower than they are today. The market could rally 50+% from here, I don’t have a clue where it’s headed. Instead, I focus on valuation and as of today, valuation says that this market is still over priced with more earnings downgrades yet to come. Could this already be priced in? Yes but please don’t spin me the crap about “markets tend to bottom 6 months before the economy” based on a small sample set. This rule of thumb so to speak is actually false. I’ll start to invest when valuations look more attractive but as of right now, I will remain in cash as I have since Feb of 2007.

  25. SWMOD52 says:

    This FDIC’s Bair:

    http://finance.yahoo.com/news/Nations-Banks-Are-cnbc-14116000.html

    There will be a buy in bank at some point. They can’t all be worthless can they?

  26. cheese says:

    No market bottom call here folks. Move along……….This chart is meant for entertainment purposes only. Any person who invests on the basis of said chart and/or the coming of ANY new messianic, charismatic, handsome leader in conjunction with the re-birth of such programs as the TVA, the WPA, AAA, or the NRA does so at their own risk and any loss of principle cannot, in anyway fault this site’s patriotic encouragement and inspiring, invigorating support for a new administration. We are all Americans now. So please, take that to heart the next time you short the SPY.

  27. call me ahab says:

    @ SWMOD52

    I am uninmpressed. What else would an FDIC Chair say? She has to instill calm- she cannot say that the banks are unpside down and bankrupt.

  28. Even w/ the 75% rally after FDR’s election, the Dow did not sustainably exceed its pre-crash 1929 high until 1951, over two decades later.

  29. John Borchers says:

    This market is something. I learned one thing. A short’s blood is green while a long’s blood is red.

  30. jason says:

    @jb

    It is something: nuts

  31. jason says:

    what is that squeezing sound?

  32. I-Man says:

    @ Jason:

    It is what it always is and always has been:

    Irrational.

    And that is what makes it so great and intriguing to so many. If it were so easy that you could look at all fundamental data and rationalize it, there wouldnt be a way to make any money.

    Aside: Looks pretty good from where I’m sitting. Bears had the shot of shots today to strike this thing down to the abyss. What happened?

    USB looks like one hell of a tell to me. You dont see reversals like that everyday.

    That IYM is looking pretty saucy if it can hold up tomorrow for a follow through. I-Man has a buy point at 35.30. Nice price channel up to 43…

  33. jason says:

    @I-Man

    “And that is what makes it so great and intriguing to so many. If it were so easy that you could look at all fundamental data and rationalize it, there wouldnt be a way to make any money.”

    For sure. I have two words for the market, when it is against me it is nuts, when it is with me it is rational. The problem for me is it is more often nuts.

    Sincerely

    The Greater Fool

  34. Ethel-to-Tilly says:

    Once S&P took out the 818 support/resistance line looks like a nice little reversal in place (and a harami) – next stop around S&P 850ish

  35. tagyoureit says:

    But, what if this chart is a trick by some agnotologist?

  36. heh heh

    aint that always an issue?

  37. Zenster says:

    call me ahab Says: @12.31

    Geithner has proven himself to be foolishly dishonest with his IMF payments. He might know how the “bailout” works and if we are in favor of more Wall Street greed he is the right man for the job. His appointment and continued backing by the new administration saddens and disillusions me. I suppose that this is Summer’s influence. I was hoping for better.

  38. jason says:

    Just filled in the gap from yesterday and then some…

  39. Steve Barry says:

    Are we supposed to draw a conclusion from one sample in 80 years?

  40. DL says:

    SWMOD52 @ 1:58

    If 98% of the banks are in great shape, then what the hell do we need a bailout for? Shut down the bad banks and move on.

    (If only she were telling the truth).

  41. Andy Tabbo says:

    Some comments on Sheila Bair on this thread…

    I saw that interview. You can tell she was lying about banks. Either that or she always looks down and doesn’t make eye contact when answering directions.

  42. tselliott says:

    What a load of cr@p. Wow. Didn’t expect to start finding mindless cheerleading here.

  43. ben22 says:

    Since BR doesn’t really have a market related post today, which is odd, I’ll bring it up here:

    What do people make of these purchases by Lewis and Dimon. They went in hard.

    I’ve always thought Dimon was a real smart guy, Lewis on the other, his 200,000 share purchase is probably just another stupid acquisition.

    Any thoughts?

  44. ben22 says:

    @ The Curmudgeon 2:21

    What’s your point?

    If you bought in at or towards the bottom of the GD it didn’t matter where the market was in 29

  45. what’s wrong with you people? The liberals are in power again, the media is on side and the world will work now. Don’t you know anything? Even Barry is seduced. Belly up everybody. Regime change is in. Drink your happy juice

  46. royrogers says:

    Barry, must now be bullish, as he can find chart(s) that support his views, or atleast
    pick time frames to prove his point.
    This 2 chart comparison is not significant from a mathematical , statistical point of view.

    I thought the market went down alot more from the 1929 peak before it finally made a bottom,
    than where we are today.

  47. chapter13 says:

    The other shoe hasn’t even dropped yet for banks — credit card losses.
    I’ve missed about 3 payments on my Citibank card, yesterday I got an offer to settle the balance for a 40% discount. I thought that was a pretty aggressive offer, too bad I can’t afford it.