FRED GOODMAN'S KEY INDICATORS FOR INVESTMENT SUCCESS
Markets in Crisis: 1991
Tuesday, February 4, 2003
Fred Goodman
The markets are seized with terror at the prospect of war. But last time around war was the catalyst for a major move.

Just before the Gulf War in January 1991, the market had been falling since Christmas.

The decline continued for about a week, at which time a clockwise pattern formed on the Dow Price/Volume Chart (I've circled it in pink below). From that pattern emerged a huge volume move followed -- on the actual day the bombing began -- by a 5.5% rally on even more volume.

The next 5 trading sessions provided us with a perfect counterclockwise "continuation buy loop," which was followed by another 5% advance. All-in-all, there was a 10% rally in the space of just three weeks.

Deja vu all over again?
 

Dow Jones Price/Volume Chart January 1991

Fred Goodman, CFP, is a fee-only Certified Financial Planner based in Los Angeles. You can send him your questions and comments via email at Fred@MarketMonograph.com. The charts and commentary represent what Fred is thinking about the market and thinking of doing for his own account and for accounts he manages. There is no guarantee that you will profit from trading as discussed herein. You may lose money and Fred assumes no responsibility for what you do or do not do with this information.