20% of Largest Bankruptcies Since 1980 in Past Two Months: Is this the bottom?

Some say things are getting better and point to the yield curve as evidence, saying long-term bond interest rates are going up because demand is down because investors are less inclined to seek the safety now that things are getting better.

But, 90% percent of the top 20 bankruptcies since 1980 have occurred in the 2000s. 55% since 2005. 45% since 2007. 25% in 2009. Through May there have been 341 months since 1980. 25% of the largest bankruptcies have occurred over the past 5 months, which is 1.4% of the elapsed time. 20% of the bankruptcies have occurred in the past 2 months (April, May, plus today), which is approximately .005% of the time.


source


Maybe we are at the bottom, but who knows for sure, and for how long if so. I am thinking that this is the start of the bottom of a U-shaped curve.


[edit on 1-6-2009 by greenorbs]

I think its just the tip of the iceburg.


I could be wrong but it sure doesn't look like it!

reply to post by greenorbs


I see green shoots.

Green shoot's in the bankrupt repossessed malls, in the closed car dealerships, all through California, in the condo's in Miami, in the yards of foreclosed homes.

Yeah plenty of green shoots around, but none of them are a positive sign.

The bottom is coming - but I don't think it will flicker away slowly - I think it will be a sudden crashing collapse.

reply to post by Amagnon


With the job losses mounting, and the skyrocketing healthcare costs that are not going to abate anytime soon, we are in a for a rough ride. I provide a skilled service, so with hope I will be able to ride it out.

I did a Fibonacci retracement on the Dow a while ago, and it had the Dow going to 5,200.

reply to post by greenorbs


You did a what?

Mind detailing it here for us?

Originally posted by Rockpuck
reply to post by greenorbs

 

You did a what?

Mind detailing it here for us?

1 1 2 3 5 8 5 3 2 1 1

Fibonacci retracement is a very popular tool among technical traders and is based on the key numbers identified by mathematician Leonardo Fibonacci in the thirteenth century. However, Fibonacci's sequence of numbers is not as important as the mathematical relationships, expressed as ratios, between the numbers in the series. In technical analysis, Fibonacci retracement is created by taking two extreme points (usually a major peak and trough) on a stock chart and dividing the vertical distance by the key Fibonacci ratios of 23.6%, 38.2%, 50%, 61.8% and 100%. Once these levels are identified, horizontal lines are drawn and used to identify possible support and resistance levels. Before we can understand why these ratios were chosen, we need to have a better understanding of the Fibonacci number series. (For a more in-depth discussion of this subject, see Fibonacci And The Golden Ratio.)

For reasons that are unclear, these ratios seem to play an important role in the stock market, just as they do in nature, and can be used to determine critical points that cause an asset's price to reverse.

Source

or check out the pioneer of this approach, Ralph Elliott:

The Elliott wave principle is a form of technical analysis that attempts to forecast trends in the financial markets and other collective activities. It is named after Ralph Nelson Elliott (1871–1948), an accountant who developed the concept in the 1930s: he proposed that market prices unfold in specific patterns, which practitioners today call Elliott waves. Elliott published his views of market behavior in the book The Wave Principle (1938), in a series of articles in Financial World magazine in 1939, and most fully in his final major work, Nature’s Laws – The Secret of the Universe (1946).[1] Elliott argued that because humans are themselves rhythmical, their activities and decisions could be predicted in rhythms, too. Critics argue that the Elliott wave principle is pseudoscientific and contradicts the efficient market hypothesis.

R. N. Elliott's analysis of the mathematical properties of waves and patterns eventually led him to conclude that "The Fibonacci Summation Series is the basis of The Wave Principle."[1] Numbers from the Fibonacci sequence surface repeatedly in Elliott wave structures, including motive waves (1, 3, 5), a single full cycle (5 up, 3 down = 8 waves), and the completed motive (89 waves) and corrective (55 waves) patterns. Elliott developed his market model before he realized that it reflects the Fibonacci sequence. "When I discovered The Wave Principle action of market trends, I had never heard of either the Fibonacci Series or the Pythagorean Diagram."[1] The Fibonacci sequence is also closely connected to the Golden ratio (ca 1.618). Practitioners commonly use this ratio and related ratios to establish support and resistance levels for market waves, namely the price points which help define the parameters of a trend.[4]

wikipedia

Interestingly, he wrote a book called "The Secret of the Universe" using his insights.

I took a macro look at the Dow, and using the Golden Ratio, from the peak at 14,164 on October 9, 2007, gives you levels at 5,347 (two levels down), and 8753 (one level down). Today, June 4, 2009, the Dow closed at 8750. Soooooooooo, next stop is 5347, which I rounded down to 5200 as a bottom.

If you make any money shorting using this, U2U me with a commission

LOL interesting stuff though, kind of like throwing darts in a way

I want to read Elliott's book on the Secret of the Universe.

Edit: multiply DOW by .618, the Golden ratio inverse, see

The first known approximation of the (inverse) golden ratio by a decimal fraction, stated as "about 0.6180340," was written in 1597 by Prof. Michael Maestlin of the University of Tübingen in a letter to his former student Johannes Kepler.[12]

en.wikipedia.org...

[edit on 4-6-2009 by greenorbs]

[edit on 4-6-2009 by greenorbs]

reply to post by greenorbs


Its strange you should bring this concept up. It's also known as the 'theory of elegance'. If you look at furniture or any wood work from the 1800's, they are all based on the 3-5-8 principle. You can take a pair of calipers on old furniture from the period and by measuring the different scrolls or ornimature of the wood work, it all works out as either 3-5 or 3-8 ratio. Many mathematical principles are also based on this ratio!


Zindo

reply to post by ZindoDoone


I will have to look into that. Do you have a link? i am very interested in all things dealing with the Golden Ratio, Sacred Geometry, and patterns involving the Fibonacci sequence.

Thanks for the info, I will check it out.

reply to post by greenorbs


Sorry, no link. I learned of this through learning to build Pennsylvania rifles. The unique style of these rifle stocks are based on this principle!

Zindo

reply to post by greenorbs



If you understand the real cause of the whole econmic downturn is debt being way too high, it is very clear that we are nowhere near recovery. These bankruptcies are a good thing, they are clearing some of the excess debt.

Excess debt prevents consumers/corporations from spending or being able spend or to borrow. If lenders get out of control and loan money stupidly to people that cant be pay it back they will eventually go broke, or the government goes broke propping them up. Our government is going broke propping up the bad lenders. The debt is not gone it has only been transferred to the citizens who will be more heavily taxed and will suffer inflation, and to some extent will be transferred to owners of our treasury bonds and the dollar. No economic progress can be made till the excess debt is cleared - and we have not even made a tiny dent in it yet.

The debt load at the individual and corporate levels are at most 5 - 10% off their peaks. Historically personal debt is 2 - 2.5 times above normal still.

Government debt load has increased greatly but at the same time tax collections are way down due to the slowdown and lack of profits. This is creating government deficits way above projections. To combat these deficits tax rates are very likely to be raised significantly locally and federally. This of course also takes money out of the economy to spend, and create growth.

No matter what any politician says there is no shortcut, the debt has to be paid down, or defaulted significantly before we can recover.

Recovery at this point is a ridiculous myth.