Updating the Intraday 1987 Crash Comparison to Today

May 10, 2010: 10:57 AM CST

Last Friday, I posted a comparison to the 1987 Crash to Today’s “Crash/Recovery“.

The chart below is the 5-min intraday look at the 1987 October 19 crash:

This Monday, as a result of the European Bail-out Plan, we see the pattern complete the “Recovery” portion of the crash.

Let’s take a look at the current intraday chart to see the four phases of Crash to Recovery, as played out similarly to 1987:

On Friday, I showed the “Pre-Crash,” “Crash,” then suggested that the market would go through a period of “Digestion” which could lead to a similar upside “Recovery” to complete the full pattern.

That’s exactly what has happened so far.

How far the recovery will last and where the comparisons break down are yet to be seen, but this serves as another helpful lesson of how looking at past history can be helpful in forming not only a frame of reference, but a plan of possible attack if the pattern repeats.

It can also make sense of wild, seemingly irrational swings in the market.

Corey Rosenbloom, CMT
Afraid to Trade.com

Follow Corey on Twitter:  http://twitter.com/afraidtotrade

8 Comments

8 Responses to “Updating the Intraday 1987 Crash Comparison to Today”

  1. crosscreek Says:

    One big difference: the “recovery” has pretty much erased the entire crash drop. That was not the case in 1987.

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