December to Remember

Well, this is not a Lexus add, just quick few thoughts on what's going on in the markets, or rather a certain theme that bothers me about them. I'm just worried about all those kids in Germany trading stocks who instead of St. Nicholas will host a terrible Krampus this Christmas. You can look it up but in a true german tradition of brothers Grimm variety Grinch is a harmless, warm fellow compared to Krampus.
Going back to the markets. DAX is following its pattern of head and shoulders top that was finally retested this week and failed in a spectacular fashion, pulling down all the other markets with it.

What bothers me with that, is that there is no news about Germany, while clearly that is what's bringing the markets down now, not China as the usual market commentators are getting excited about. So if there is no news now, there is still lots of positioning to unwind, and DAX may exceed the target and end up around 8000 instead of the H&S target of 9700. That would be 41% drop in par with the initial 1929 DOW decline. If that would come to fruition, the Grinch will make the visit here as well. Now, if you go back to my previous post, you will see why it bothers me a lot.

1929

It is supposed to be about the stock market, but before I will get there, a bit of detour first. I am just wondering if 2018 will be a memorable year. Most of the history is basically a blur. Just try pick up a random year and than bring one event that happened. Most of the time you will end up blank. Yet, there are years that stand out, that are memorable. Just a little quiz, an easy one: 33, 476, 1492, 1776, 1789, 1914, 1918, 1929, 1939, 1945, 1987, 2000. Congratulations!
Mathematically, those numbers are random. Yet, some folks believe that there is some order in the history and it conforms to predetermined cycles. One theory percolating around that Fibonacci sequence has some predictive power. This is obviously a quackery. Nevertheless, finding some rules, no matter how spurious can make us feel better, providing a comfort of illusion that we have understanding or maybe even control over something that we really do not have. So, we keep trying. Anyway, where I am really going here is simple observation that 89 is a Fibonacci sequence number and it has been 89 years between 1929 and 2018. Does it imply anything particular? Nope, absolutely nothing, just a bit of rambling on my part.
Another interesting and related belief is that history repeats itself, or rather rhymes. This one is actually a good observation, the only problem is that this still does not have a predictive power, since at any given moment similarity may end and the outcome completely diverge, so it is only good in the retrospect.
Well, speaking about similarities, one caught my eye this weekend.
This is Nasdaq chart in the Summer of 2011:

Next is current chart:

Does the similarity determine what's going to happen next?
Obviously not.
Nevertheless, I take seeing possibilities over being oblivious.
Have a blissful Memorial Weekend to All!