Get 40% Off
🤯 This Tech Portfolio is up 29% YTD! Join Now to Get April’s Top PicksGet The Picks – Just 99 USD

Comparing Today’s Market With The 1970s

Published 04/19/2020, 02:56 AM
Updated 07/09/2023, 06:31 AM

DJIA Monthly Chart - 1900 Present

Many are calling the recent market activity similar to the great depression of the 1930s.

And clearly there are some comparisons.

But what did not exist in the 1930s was this level of QE.

During 1932, with congressional support, the Fed purchased approximately $1 billion in Treasury securities.

Now that the Fed has bought up debt to an unprecedented level and the government is spending trillions on stimulus, depression is not out of the question.

I show you (and I believe this is completely original and unique content) that there is a better comparison though, to the mid ’70s.

In the chart of the DJIA you can see the depression, which hit a nadir in 1932 then came roaring back.

From 1954 (when the pre-depression highs were taken out) until 1970 the market enjoyed a huge run from 200 to 1000 in the DJIA.

Then, the first crisis hit with the Yom Kippur war.

Then came the oil embargo when OPEC formed and tripled oil prices.

Gas lines and oil prices spiked. We have a different type of oil crisis now-as nobody is using it and there is an oversupply.

The DJIA went from a peak in 1971-72 at 1000 and dropped to 577.60 in 1974. It took nearly 10 years for the market to return over 1000.

In 1972 oil was priced at around $22 per barrel.

Now, in 2020, with oil trading around those 1970 lows, what happens once the demand returns?

Throughout the last 60 years, every time oil has gotten down to around 20, something dramatic has happened to raise oil prices.

S&P 500 (NYSE:SPY) 287-290.45 (retrace to the MA breakdown)

Russell 2000 (IWM) 114.55 support 118-120 pivotal. 125.80 2018 November low resistance

Dow (DIA) 240 pivotal

Nasdaq (QQQ) 205 support. 220 big resistance

 

KRE (Regional Banks) 33.10 pivotal support

SMH (Semiconductors) Confirmed Bullish phase 128 support to hold

IYT (Transportation) Really needs to clear 150 to get interesting

IBB (Biotechnology) 120 pivotal support

XRT (Retail) 31.00 support 36-38 resistance

Volatility Index (VXX) 35 the 50-DMA

Junk Bonds (JNK) 100.66 the 50-DMA.

LQD (iShs iBoxx High yield Bonds) Inside week. 129.10-132 range to watch break. 135 resistance

Latest comments

I agree, we haven’t hit the lows yet, we definetly will see more crisis development in the next 2 years.
Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.