Last week many commentators jumped on the Dow passing a key chart point as a bullish indicator. Rather fewer bears highlighted the equally prescient point that the rally now almost exactly matches the rally of 1929 in percentage gain.
It is almost as if the last bear has thrown in the towel. Isnt it? Even Marc Faber has ruled out a massive crash as he says FED will print more and hence support the falling equities.
Consider these three charts from MoneyWeek that show three very recent examples superimposed on the 1929 Great Crash:
And yet it is no coincidence that we are right at the last stages of Bear market rally of the size seen only in 1929. I think there was never a fundamentals to support the rally but then that is why it is called a bear rally. But then it is a real puzzle on how the bulls start to think the bear rally will transform into a bull rally.
History as shown with the three charts is quite clear. After every major crash we see a rally spurned by the government and central banks. But eventually the house of cards will topple over.
The suggested strategy is to short every asset (excluding Gold) and build up a short portfolio over the next few months. The crash may not come tommorrow but it will eventually unless you believe the consumers are going to open their pockets and continue to leverage as seen in 2006/07.