THE END IS NIGH – Technical Scoop from David Chapman

“It’s a recession when your neighbour loses his job. It’s a depression when you lose your own.”
– Harry S. Truman

The stock market has crashed. Pretending it is anything else is futile. What has for years been predicted by the perma bears has come to pass. But now that it has happened we can begin to focus on the recovery. The end is nigh. While it will be a severe recession or even a mild depression, either of which will grip us for more than a few years and maybe a decade or more as it is with Japan, we can with the mind boggling collapse of the past two weeks begin to focus on how to get out of this mess.

First, some perspective on the depth of this stock market crash. Over the past two weeks the S&P 500 fell 25.9 per cent, the Dow Jones Industrials 24.2 per cent, the NASDAQ 24.5 per cent, the TSX Composite 25.1 per cent, TSX Financials 21.2 per cent, TSX Energy 39.2 per cent and the TSX Gold 15.5 per cent. The damage was worldwide – Tokyo Nikkei Dow 30.4 per cent, Hong Kong Hang Seng 20.8 per cent, FTSE (London) 22.7 per cent, CAC 40 (France) 23.7 per cent and the DAX (Germany) 25.1 per cent. While this crash happened over a two-week period, we note that the two-day crash of October 28-29, 1929 fell 23.6 per cent and the one-day crash of October 19, 1987 fell 22.6 per cent (Dow Jones Industrials in both cases).

By most measures of previous stock market crashes we should be at or very near a low for this phase of the bear market. October 19 was the low in 1987, while in 1929 the low was seen nearly a month later, on November 13, but it was another 13.6 per cent lower. A two-day rally was quickly wiped before leading to the final low. As we note, the end is nigh.
In 1987 fears of a severe recession or even a depression never materialized. Yes, there was a recession, and a painful one, especially to the real estate sector and the fallout from the savings…..

Subscribe to David’s reports and read more about:

• The end is nigh
• A crash of historic proportions
• Maximum fear now in the market should probably signal a short term low
• We face a deep recession or even a mild depression. On the other hand we could be surprised.
• While there are similarities between now and the 1930’s the differences outweigh the similarities and a repeat of the 1930’s will not happen.

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