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Strong

Stocks Peak One Year After Bonds (History Set to Repeat?)

Financial parallels between the 1920s and today

By Elliott Wave International

When the financial media mentions the late 1920s, they usually mean the 1929 stock market top. But today's investors can also learn from what happened in 1928. That was the year that the bond market topped, while commodities peaked even sooner.

You can see this for yourself in a chart published in the September 2013 issue of Robert Prechter's Elliott Wave Theorist.

In the deflationary collapse of 1929-32, commodities fell
from lower peaks, not higher peaks; stocks fell
from all-time highs down to the bottom; and bond
prices fell from an all-time high a year earlier.

The Elliott Wave Theorist, July-August,
2013

These markets could see a similar outcome in the near future: Commodities peaked in 2008, while Treasury bonds topped in 2012. The high in the Dow Industrials remains December 31, 2013.

Of course, history doesn't always repeat itself. Whether December 31 proves to be a long-term high in the Dow remains to be seen. The stock market rally since March 2009 has been doggedly persistent. Prices have surged several times just as the indicators suggested the uptrend was over.


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This article was syndicated by Elliott Wave International and was originally published under the headline Stocks Peak One Year After Bonds (History Set to Repeat?).

EWI is the world's largest market forecasting firm. Its staff of full-time analysts led by Chartered Market Technician Robert Prechter provides 24-hour-a-day market analysis to institutional and private investors around the world.

Comments

  1. Rasesh Shukla -India says:

    History doesn't always repeat itself, but then too, mostly history indicates some similar probabilities. Considering everything, we can point-out that no one is in a position to Tell us about " HOW - WHY - WHEN AND WHERE it will be happened or from which place, but situation is not normal at all, and even major abnormality can be very easily assumed at this juncture.

    Repeating History may taken place with some different perspectives, so don't take things easy or in a taken for granted reactions, because i think, forth coming events and happenings will be far more wide spread crucial, complex and compounded, having "never before seen ultimate cruelty " even much more then 1929 - 1932 period or all other earlier Financial Crises witness by the world at whole.

    • Stefan Ohlinger says:

      No, I don't guess, that history repeats with that dramatic compared to the 1920s.

      • Rasesh Shukla -India says:

        Dear Stefan,

        Thanks for feedback, if you think more precisely about the presence and availability of communication, transportation or logistics, and all other related financial and non-financial issues, current situation is deemed to be more fragile and sensitive, all economies world wide connected and depended on each other in an absolute term, so it will be irrelevant and will no matter that from which country trouble or sharp and abnormal fall taken place, for very very very immediately panic will appear and thereafter consequent chain reaction effect will made things more worst and with much more higher pace.

        in a other way we can imagine that in 1929 period, communication was so poor that crises were spreader in a very slower movement um, but now, you batter aware of, what is a current situation in this internet era, so things will be more disastrous and much faster then 1920's time.

  2. Would the bond market have topped in '28 if they had a QE 1,2 and 3 in place? If memory serves, Hoover raised interest rates to defend the dollar. Right?

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