How many of you have tested your strategies against a repeat of the 1987 crash? I.e., major indices open down 7% then decline another 15% that day. Or are we all too afraid to contemplate the outcome?
I am praying for a crash. I predict a global crash or some kind of correction. Every single market across the board is at almost record highs and the charts scare the crap out of me. Jesus, even Australia is at record highs. The Shanghai reminds me of the Nasdaq in 99' 00'. I feel bad for anyone trying to get in now only to get burned in the near future...
======================= Yes; & we are about due for a bear market, perhaps it didnt start 2-27 like some of us figured
how do you know when the crash happens? In the week leading up to the 87 crash, the US indices were down big and people thought the crash had already happened. Then the "real" crash happened. People who went in long just before Black Monday would have been crushed. I also want a slow crash ala Nasdaq 2000.
Some say volume is very telling. I have read that the volume the week prior to the Feb 27 slide was very low,also have read recently where the volume for the past ten or so days has been very weak,could this possibly be signaling another rude awakening in the near future? I'll leave it up to you pro types to fill us in about the importance of the volume and potential rude or not rude awakenings..
P/E's vs. fixed returns are nowhere near stretched enough for a "crash." High prices alone aren't enough for a crash. Prices stretched beyond value are the catalyst for huge, quick selloffs. While I wouldn't worry about a single day 22% crash, I WOULD be on guard against a 3 month 20% break. Not saying it started today but IMO the market will be lower at year end than todays close.
Watch the dollar...same catalyst as before. But really not on the horizon....yet However, the PPT is much more "real" than it was back then. So any dislocation of the markets will be a bit less fast...but ultimately much more deadly than the last one.
I got really worried about this just a few weeks ago. I compared the Dow price action in 1987 leading up to the crash to our recent price action and thought I saw some troubling similarities. It still looks close enough to worry about. 4/2/87 through 10/5/87 looks a lot like 5/12/06 to 4/11/07. Percentage changes, retracements, proportions don't match up, at least no way I could find, just the "look" of the charts. http://i140.photobucket.com/albums/r18/MarkandGracie/dow87.jpg http://i140.photobucket.com/albums/r18/MarkandGracie/dow07.jpg