Double Bottoms Gone Wild

posted on June 6th, 2008 filed under: Real Estate News

The stock market is widely thought to have made a double bottom in January and March.  Maybe so.  But it is at least possible for a market to go sideways for a while and then head lower — perhaps a lot lower.

Consider 1973.  The market had scratched and clawed its way back to the high of the dearly departed great bull of the ’50s and ’60s.  It turned lower, falling about 16%, before going sideways.  It churned for six months, making from two to four bottoms, depending on how you count.  Then it broke to the downside, falling 10% beneath so-called support.  Again, it churned for six months, making from two to four bottoms, depending on how you count.  Again, it broke to the downside, plunging 30% beneath so-called support.  The total loss was almost 50%.

Sometimes double bottoms are unfaithful.

Chart.S&P.1973-74

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posted by // This entry was posted on Friday, June 6th, 2008 at 1:09 pm and is filed under Real Estate News. You can follow any responses to this entry through the RSS 2.0 feed.

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