Charts lining up nicely doesn't prove anyting. Charts are not great predictors of the future but rather reflectors of the present. But here's what the staff at Elliott Wave International are thinking.
Stocks Peak One Year After Bonds (History Set to Repeat?)
Financial parallels between the 1920s and today
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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Robert Prechter has just released an issue of his Elliott Wave Theorist publication that includes 15 charts of the S&P 500, NASDAQ, gold, and mutual funds — along with his analysis. Download your free 10-page report now >>
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?).
