Please enter the email address associated with your account below and a temporary password will be emailed to you. The stock market understood what was happening as well S1 Chart xx tracks the Dow 30 Industrial Index through something called an Exchange Traded Fund (ETF) with the exchange symbol of DIA; I trade options in trying to guess whether it will go up or down each month. It was precipitated by the rich-man’s” market crash known as the tech-bubble in 2000; neither were very large and are not covered in this book. By 2004, the market had recovered most of its loss and was back to Jan 2002 levels.
Partly in reaction to this and other world events, the market went into a year-long retreat and GDP stopped growing at a sustainable rate and slipped to a 2.5% range for awhile before finally falling into the massive 2008 recession. While economic growth was moving toward the precipice, the market was initially following along. I think something a lot of people don’t know is that many homeless people do work – they just cannot afford a place to live.
The market began to take-off while the GDP struggled to keep aloft and then fails; housing starts, then housing prices peak followed by a reversal. On the one hand, we see the stock market going crazy, along with the home loan industry; billions were being make in the financial industry … but being lost elsewhere (with nobody noticing just yet). Goldman Sachs didn’t believe the portfolios held by AIG (and Bear Stearns) were worth what AIG said they were because the housing market was collapsing. In response, the stock market nose-dived 778 points, the one-day loss in its history.
Now, there isn’t anybody who could have known at the time, but that local high followed by the local low was the left-shoulder of a Top Head-and-Shoulder formation pattern that is recognized as a rather bad sign in technical stock market analysis. Author’s note – I actually remember when the above statement and Moody’s assurances were put out.. The stock market rose accordingly the next few days until August 6 when word began leaking out that both Countrywide and Moody’s were rethinking their position. By May 19, 2008, it was all over but the shouting for the stock market, and America as it turns out.
It was this announcement by the Fed and reports from Bear Stern and Goldman Sachs of beating earnings estimates that pushed the Dow Jones to its final high on October 10, 2007, 78 years and 36 days after the market reached its peak in 1929. However, because this happened so close in time to the market high, technicians will be looking for a confirmation, although they will now be taking precautionary steps to exit the stock market should things start to go south.