These Diamonds Aren’t Forever

Is it, in fact, different this time?

Different in the sense that this particular long, sideways cycle will actually resolve lower (think Bob Prechter) instead of higher, like it has for the past 100-plus years? It has generally been a bull run for America, but the secular bears are the stuff out of which legends are made, notably the 1929-1942 bear and the 1966-1982 bears.

Here is an updated quarterly chart of the Dow going back to the 1920’s. Note the diamond/megaphone patterns during each of the past bears. Normally, they are viewed as bearish patterns after a prior steep uptrend. On this timeframe, though, they resolved obviously much higher.

DIfferent this time? One thing is for sure: These diamonds won’t last forever.

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