US Stock Market: Conspicuous Similarities with 1929, 1987 And Japan in 1990

The comments above & below is an edited and abridged synopsis of an article by Dimitri Speck

There are good reasons to suspect that the bull market in US equities has been stretched to the limit. These include high fundamental valuation levels, rising interest rates, and the maturity of the advance.

The mother of modern crash patterns was the 1929 debacle. It is both scary and sad in light of what it represented. In many ways, the Roaring Twenties were the last hurrah of a world in its death throes, a world that never managed to make a comeback. The massive expansion of the state that had begun in the years just before WW1 resumed in full force as soon as the post-war party on Wall Street ended. The worried crowd that formed in the streets around the NYSE in the week of the crash may well have suspected that the starting gun to profound change had just been fired.

Near the end of a bull market cycle there is always the question of when a decline will begin and how large will it be. Speck believes it is possible that the retreat in prices will begin soon, and that it could even start out with a crash.

Up for discussion: From 2015 to 2018 the S&P 500 Index moves up along a well-defined trend line; in 1987, the market crashes after breaking through a similar trend line; in 1929 the Dow also crashes right after breaking a major trend line; in 1990 a similar pattern and trend line break precede the crash in Japan’s Nikkei; when is the danger acute; and the preconditions are in place.