Are We Headed For A 1929 Crash?

Our toppy market could be headed for a big correction, if technical analysis is any guide.

That’s the conclusion of the McClellan Market Report newsletter chart, above, published Wednesday. It shows the rising performance of the Dow Jones Industrial Average since July 7, 2012 through today, in red. The black line above it is the Dow during 1928 and into 1929.

The prediction: the market could peak in mid-January, and lose all of its 2013 gains by the end of March 2014.

The Dow is up 40.62 points or 0.25% today to 16137.95. On Wednesday, at 16097.33, the DJIA hit a new record high, which represented the 44th record close this year.

Of course, the 1929 comparison has its problems. In the 1920s, the Federal Reserve raised the discount rate as high as 5%. Moreover, the New York Stock Exchange in that era was open six days per week. Thus, there were 43 more trading days in 1928 than in 2012.

McClellan Market Report Editor Tom McClellan warns that “expectations of precision are just not warranted” and no one should assume “the equivalent of the Sep. 3, 1929 top is ideally due Jan. 14, 2014.”

However, he writes the approximate Jan. 14 market-peak date “is all the more interesting” in light of work by another newsletter writer, and another author — of a book on George Lindsay’s market analysis. These two also expect some kind of January peak. One, based on Fibonacci cycle expansion analysis, and the other based on counting the number of days forward from important market dates, and identifying “a basic advance” — sometimes not the lowest low.

Hot Tech Stocks To Own Right Now

For more on the “1929 Analog” from McClellan, click here.  

Wednesday’s top DJIA laggard stocks were higher, up less than a point, headed into the early 1 p.m. close today. McDonald’s (MCD), Disney (DIS), Chevron (CVX) Procter & Gamble (PG) were up, though ExxonMobil (XOM) shares were flat headed into the close. 

Among the largest components of the SPDR Dow Jones Industrial Average exchange-traded fund (DIA), Visa (V) and International Business Machines (IBM) are slighlty higher today, while Goldman Sachs (GS) shares rose nearly a point.