(Washington, D.C.) — I hope there is nothing to this. But I thought I ought to share it with you anyway.
“There are eerie parallels between the stock market’s recent behavior and how it behaved right before the 1929 crash,” says a columnist writing for the Wall Street Journal’s Market Watch. “That at least is the conclusion reached by a frightening chart that has been making the rounds on Wall Street. The chart superimposes the market’s recent performance on top of a plot of its gyrations in 1928 and 1929. The picture isn’t pretty. And it’s not as easy as you might think to wriggle out from underneath the bearish significance of this chart.”
“I should know, because I quoted a number of this chart’s skepticsin a column I wrote in early December,” notes Wall Street analyst Mark Hulburt. “Yet the market over the last two months has continued to more or less closely follow the 1928-29 pattern outlined in that two-months-ago chart. If this correlation continues, the market faces a particularly rough period later this month and in early March. (See chart, courtesy of Tom McClellan of the McClellan Market Report; he in turn gives credit to Tom DeMark, a noted technical analyst who is the founder and CEO of DeMark Analytics.)”
“One of the biggest objections I heard two months ago was that the chart is a shameless exercise in after-the-fact retrofitting of the recent data to some past price pattern,” Hulburt notes. “But that objection has lost much of its force. The chart was first publicized in late November of last year, and the correlation since then certainly appears to be just as close as it was before. To be sure, as McClellan acknowledged: ‘Every pattern analog I have ever studied breaks correlation eventually, and often at the point when I am most counting on it to continue working. So there is no guarantee that the market has to continue following through with every step of the 1929 pattern. But between now and May 2014, there is plenty of reason for caution.’ Tom Demark added in interview that he first drew parallels with the 1928-1929 period well before last November. ‘Originally, I drew it for entertainment purposes only,’ he said—but no longer: ‘Now it’s evolved into something more serious.’”….
QOTD: “The Senate is where the most dramatic changes could occur if a GOP wave develops next year.
In 2010, Republicans gained six Senate seats including two states that Sen. John McCain carried in 2008 (Arkansas and North Dakota) and four states that then-Sen. Obama won (Illinois, Indiana, Pennsylvania and Wisconsin). The only Democrat to win a Senate race in a McCain state in 2010 was Joe Manchin III in West Virginia. A six-seat takeover wasn’t enough for a majority in 2010 but would be enough next year.
Democrats have demonstrated their ability to win close Senate races in the past. But it’s worth noting that the party won six races last cycle with 51 percent of the vote or less in what was likely a more favorable environment than 2014. Incumbent Sen. Jon Tester was re-elected with 48.6 percent in Montana and Ohio Sen. Sherrod Brown won with 51 percent. Open seat Democratic candidates such as New Mexico’s Martin Heinrich and Wisconsin’s Tammy Baldwin won with 51 percent, and Indiana’s Joe Donnelly and North Dakota’s Heidi Heitkamp just cracked 50 percent.