Tuesday, November 18, 2008

Anatomy of the Boom & Bust

Here's a little mock up of the varying boom and bust cycles starting in 1994 or so. One interpretation may be that we are currently going through the second and more destructive deflationary wave. Although it was only marginally higher intraday, you could interpret the recent October 2007 high as the head of a giant head and shoulder formation. You get a cleaner fit using the DJIA. In any case, this decline should take us down to the 600's at some point on the S&P. From there you could speculate the current fiscal stimulus will morph into the next bubble, possibly TIPS and precious metals markets.

No comments: