The Shape of Things to Come – It’s all in the curve
Over the weekend the trader gave me a little bit of an insight into the world of share trading charts and in particular the ‘curve’. He said that when someone sticks two fingers up at you they are generally in a “V” and they are being rude. I wish I could use my fingers to signal a “J” or possibly a “W”.
The rate at which the stock market has accelerated over the past view months is reminiscent of a train, in an advanced state of decrepitude, hurtling along an overhead railway supported by termite-rotten structures. Sooner or later, at that speed, the train will come off a bend or the velocity of the vibrations it is causing will result in the lines collapsing.
We have had too much experience of markets trying to defy gravity in the past ten years with governments helping shares to deny Newtonian physics.
Y a U, J or possibly W? “V” is the predicted shape of the recession – down and a quick bounce upwards. “J” is the shape of a long slow recovery – down and a long climb back. “W” is the dreaded double dip recession – more like a roller coaster than a railway.
Now it all makes sense.
v
