I try to show this long term monthly chart for the $COMPQ (QQQ) which I call the “End of the World History Chart” at least once a year or if something interesting takes place. When you look at the 1987 crash it felt like the end of the world at the time but that ended up being the second reversal point in the green bullish rising channel. How many remember the months leading up to the first Gulf war in 1991? No one knew at the time how that conflict would play out as the US was going up against the 5th largest army in the world. On the first night of bombing it was very clear that the conflict would be over quickly and the stock markets took off the very next day which made the fourth reversal point in the green bullish rising channel.
Which also helped put that fourth reversal point in the green bullish rising channel was the Savings and Loan crises which was dominating the headlines at that time. As you can see the COMPQ launched into one of the greatest bull markets of all time that ended nine years later when the tech bubble finally burned out.
How many remember the crash in 1998 that doesn’t look like anything on this chart but it was the LTCM, Long Term Capital Management debacle that felt like the end of the world at the time. It’s easy to look at a chart like this and see how important events in the world look in hindsight but when you are living and trading during one of these events it’s a totally different story.
After the $COMPQ topped out in 2000 it declined in a very strong move down building out the green bullish falling wedge which broke to the upside during the start of the Iraq war. The markets were crashing and the US was going to war. It doesn’t get much more negative than that but that was the low. I know most of you are familiar with the 2009 crash low which felt like the end of the world at the time but as you can see it launched a seven year bull market that is still making new all time highs.
The last chart pattern on the right hand side of the chart is the little red bull flag that just completed a backtest to the top rail last month and is now making new all time highs. The fourth reversal point on that little red bull flag was the BREXIT vote that tanked the markets which quickly reversed back up after just a couple of days.
Leave A Comment