**** CLICK ON GRAPH for FULL SCREEN IMAGE ****
This graph is the Golden-125 indicator for the 1929 Dow and the 2000 NASDAQ. Read the July 24, 2007 post to understand how the G-125 score is derived.
Many of the salient points are annnotated on the graph.
Note the two legs down after the bull market ends on the 1929 G-125 line. In the previous post the 1949 Bull had two similar moves down. The first rebound is the headfake, the second leg down takes the speculators out of the market. This happened in 1937 after the 1932 market quadrupled and inspired renewed confidence in the markets. It happened in 1974 afer the 1969-1970 recession was shrugged off and the 1973 markets raced to new highs on record corporate profits.
And most importantly, it will happen in 2008-2009 as the 2002 recession becomes a distant memory and hope springs eternal that the worst is behind us.
****** CLICK ON GRAPH for FULL SCREEN IMAGE ******
The Golden-125, graphed to the left, is a momentum indicator using several moving averages. When the shorter moving averages exceed the longer moving averages, points are assigned progressively (the relatively longer moving averages garner greater points). If every shorter-term moving average exceeds the longer moving averages, the index "max-es" out at 125.
The amazing rhyme shows the 1949 Bull compared to the current 1982 Bull.
The two longest periods in Dow history, with a Golden-125 score above 50, occured during these two Bull runs. The 1949 Bull stayed above 50 for 959 weeks while the 1982 Bull set the record by remaining above 50 for 1,007 weeks.
The first Bull bottom (G-125 = 0) occured in Week #1,070 in the 1949 Bull, while the 1982 Bull bottom occured in Week #1,077.
The "Echo Rebound", from the bottom back to the max score of 125, occured in Week #1,209 for the 1949 Bull. The second max for the 1982 Bull occured in Week #1219.
The first break-down to 50 showed the 1982 Bull being more stubborn than the 1949 Bull. As we go through the summer of 2007, the 1982 Bull is again being more stubborn; not breaking down for the second leg down; the second leg down occured in 1974-1975 for the 1949 Bull.
If you don't think two legs down are likely for the 1982 Bull, see more evidence with the rhyme between 1929 Dow and 2000 NASDAQ in the next post.