Recession Indicator?

Trade Ideas for the Active Investor

I prefer my analysis to be organic, but yesterday, I saw these posts by FinanceLancelot on X.com and felt they were too interesting to pass up.

• The X post references the historical stock market crash of 1929, drawing a parallel to current market conditions where the Dow Jones has broken above a 125-year resistance trendline, similar to events preceding the 1929 crash. This historical comparison suggests a potential market downturn.

• The mention of the "recession indicator" in the post alludes to economic indicators like stock market performance, credit spreads, and the yield curve, which have historically signalled recessions when certain thresholds are breached, like the 20% decline from peak stock market values.

• The image associated with the post, showing a chart of the Dow Jones Industrial Average, highlights significant historical market peaks and troughs, particularly emphasizing the dramatic fall from September 1929 to illustrate the potential severity of market corrections when similar patterns occur.

Below are charts I created emulating the analysis.