The Merits of Following the Trend
It is very interesting to read the reminiscences of what happened 25 years ago on the day of the market crash. One of the big misperceptions is that the crash occurred suddenly and without warning. While the magnitude of the drop was stunning, the fact that we had a substantial drop wasn't that surprising if you had been paying attention to the charts. In fact, if you used some pretty simply chart reading and trend analysis, you would have likely been on the sidelines when the crash occurred.
On August 25, 1987 the DJIA had hit a high of 2747; it then pulled back and then bounced on Oct. 2, to a high of 2662. On the next day, there was a sharp drop of 3.47% and then several more days of losses in quick succession. On Oct. 15, the Dow breached the 200-day simple moving average at 2371. At this point, the Dow was already down 13.7% from its high, had taken out key support and was in a clear downtrend....208 more words left in this article. To read them, just click below and try Real Money FREE for 14 days.
There’s no substitute for a trading floor to get great ideas, so Jim Cramer created a better one at Real Money and blogs there exclusively. We then added legendary hedge fund manager, Doug Kass, with his exclusive Daily Diary and best investing ideas. Staffed with more than 4 dozen investing pros, money managers, journalists and analysts, Real Money Pro gives you a flood of opinions, analysis and actionable trading advice found nowhere else, and allows you to interact directly with each expert.
Already a Subscriber? Please login.