Modelling the 1929 Squeeze High to SPX

An old trap on modern markets.

In this post I want to show you the topping pattern of the DJI in 1929 and show you what a similar thing in SPX of today would look like.

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Please read this free post first. We won’t be repeating thing for context.

In the previous post, we used the 4.23 extension of 2008 to show how we have similar situation to here.

In recent forecasts we’ve said the local action looks like it might setup a wave 5 spike low. Which would look like this.

Here’s the interesting bit. Let’s look closer at the DJI on the daily timeframe.

If we were in the final section before a squeeze top - we’d be in here.

Range and head fake. Looks similar, right?

And local analysis tells us we might see a sharp spike down and then that transition into a rally. We are forecasting a nominal break of the low in the drop.

If that hits, it’ll look like this candle.

In case you do not know how to read these old school bar charts, this is telling us the market gapped down. Traded up (Probably instantly) and then closed at a double bottom. Would have looked bearish AF(!!!) but this setup the final squeeze high.

Would imply these two swings coming.

This analysis is currently just a bookmark. Putting it on your radar.

If and when we have swings that further imply this may happen and we’re in zones we can define smart bets with good stops - we might look at some trades for it.

First thing we have to see is the big false breakout and bear mania.

Bears should feel confident before a squeeze starts. That should be achieved by a bull trap turning into capitulation.

The next rally will then be a strong and true one - but by this time people will have been conditioned to sell the rip.

Another big spike high. Huge failure of bear forecasts. Bull mania. Then … maybe .. it’s time to try for a legit reversal trade.