Sunday, August 30, 2009

Dow 1937-38, a portent for the future?

For anyone who likes chart overlays Don Fishback has a chart comparing the Dow between 1921 and 1938 to the Nasdaq starting in 1992. Let me elaborate a bit on the subsequent performance of the Dow. Its bottoming close in 1938 was 98.95 (3/31), it then rallied, consolidated in August, drifted below the August lows in September, and rallied to a closing high for the year of 158.41 on November 12. Alas, 1939 through 1941 never saw a breakthrough to new highs. On April 30, 1942, the DJIA dipped just below the 1938 low before beginning its wartime rally. Although the short-term prospects may be bright if history repeats itself, let's hope we don't end up treading water for four years.

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