A Couple of Charts for the Doom and Gloomers

Lots of investors are wondering how far the market could go if this slide continues. Although the correct answer is that the market could theoretically go all the way down to zero, we know that this is unlikely. Although zero is unlikely, a much farther fall is certainly a possibility and if you're in the Harry Dent style "Doom and Gloom" camp and believe that our nation is about to slide into one of the worst depressions in history, a huge fall is likely.

For some reason this historical chart of the S&P made me think of the "Doom and Gloomers" because it is a good portrayal of how high the index has climbed since 1960. It also shows a nice double top that started in the Dot.com bubble and finished in 2007. As the above chart shows, we definitely have plenty of room to fall if this market continues its current downtrend. Don't get me wrong, I'm not predicting or claiming that the market will indeed continue falling, I just think that this chart offers an interesting perspective.

While we're looking at historical charts, this next chart is of the Dow Jones Industrial Average from 1920 to 1940. It offers a little insight as to what a major depression looks like on a chart. Notice how sharp the 2 1/2 year decline was and also how severe...topping out at 381.17 and finally bottoming at 41.22, almost as bad as CMGI (now Modus Link: MLNK) after the dot.com burst.It's nice to look at and think about history to put some perspective on current situations. I hope everyone has a good weekend.

Good luck out there.

TLT