Subscribe to RSS feeds Bulkowski Blog via RSS

Support this site! Clicking the links (below) takes you to Amazon.com. If you buy ANYTHING, they pay for the referral. My books...

Encyclopedia of Chart Patterns 2nd Edition book.
Chart Patterns: After the Buy
Getting Started in Chart Patterns, Second Edition book.
Trading Basics: Evolution of a Trader book.
Fundamental Analysis and Position Trading: Evolution of a Trader book.
Swing and Day Trading: Evolution of a Trader book.
Visual Guide to Chart Patterns book.
Picture of Bumper.
Kindle
Picture of the head's law.
Kindle

Bulkowski's Review: Crash of 1929

Class Elliott Wave Fundamentals Psychology Quiz Studies Setups Software Tutorials More...
Busted
Patterns
Candles Chart
Patterns
Event
Patterns
Small Patterns
As of 08/23/2019
  Indus: 25,629 -623.34 -2.4%  
  Trans: 9,740 -333.41 -3.3%  
  Utils: 832 -8.66 -1.0%  
  Nasdaq: 7,752 -239.62 -3.0%  
  S&P 500: 2,847 -75.84 -2.6%  
YTD
 +9.9%  
 +6.2%  
 +16.7%  
 +16.8%  
 +13.6%  
  Targets    Overview: 08/15/2019  
  Up arrow27,200 or 24,900 by 09/01/2019
  Up arrow10,700 or 9,550 by 09/01/2019
  Up arrow850 or 790 by 09/01/2019
  Up arrow8,200 or 7,400 by 09/01/2019
  Up arrow3,000 or 2,750 by 09/01/2019
As of 08/23/2019
  Indus: 25,629 -623.34 -2.4%  
  Trans: 9,740 -333.41 -3.3%  
  Utils: 832 -8.66 -1.0%  
  Nasdaq: 7,752 -239.62 -3.0%  
  S&P 500: 2,847 -75.84 -2.6%  
YTD
 +9.9%  
 +6.2%  
 +16.7%  
 +16.8%  
 +13.6%  
  Targets    Overview: 08/15/2019  
  Up arrow27,200 or 24,900 by 09/01/2019
  Up arrow10,700 or 9,550 by 09/01/2019
  Up arrow850 or 790 by 09/01/2019
  Up arrow8,200 or 7,400 by 09/01/2019
  Up arrow3,000 or 2,750 by 09/01/2019

Written by and copyright © 2005-2019 by Thomas N. Bulkowski. All rights reserved. Disclaimer: You alone are responsible for your investment decisions. See Privacy/Disclaimer for more information. Some pattern names are the registered trademarks of their respective owners.

Below is a review of what is termed the crash of 1929 from a technical analysis perspective. I show the chart full size because when I reduced it, it looked like...well...terrible. So you will have to maneuver up and down. Sorry about that.

Picture of the crash of 1929 and following

A broadening top appeared in early 1929, but this did not have bearish implications. In fact, the partial decline at point A was bullish. The Dow broke out upward from the chart pattern, leading to the peak at B.

Look at the inset, the blue box. This is on the daily scale while the rest of the chart appears on the weekly scale. The head-and-shoulders top chart pattern is obvious even though the shoulders are a bit muted. They remind me of a big chicken with small wings. Anyway, the head-and-shoulders top, when confirmed by price piercing the neckline (F) or closing below the right shoulder low (red dashed arrow), suggested the market was going down.

And down it went. The drop from B to C took the index from a high of 386.10 on September 3 to a low of 195.35 on November 13. That is a drop of 49% in just over two months. But that was just the start of the decline.

A pipe bottom signaled a recovery until mid April when the Dow turned down again (D). The decline was not a straight-line run, but on this scale, that did not matter much. A descending scallop broke out downward, suggesting additional declines. A second pipe bottom indicated a recovery, but it did not last long.

The index bottomed in July 1933 at a low of 40.56. From the peak at B to the low at E, the Dow dropped an astounding 89%! The crash of 1929 was quick and severe, but the bear market that followed made things much worse.

Not shown in the above chart, but once the decline finished, the Dow doubled in two months and formed a high and tight flag that never confirmed. The Dow dropped back and formed an ugly double bottom and then began a long recovery.

-- Thomas Bulkowski

Top 

See Also

Written by and copyright © 2005-2019 by Thomas N. Bulkowski. All rights reserved. Disclaimer: You alone are responsible for your investment decisions. See Privacy/Disclaimer for more information. Some pattern names are the registered trademarks of their respective owners. Everybody lies, but it doesn't matter because no one listens.