More napkin analysis

I looked at what I sold early last month and compared prices to today and I made a good choice in most cases. EIX is the only one that is above where I was, but USG is way way down. I'm still about even where I got out of my second half of ATVI and that is really the only stock I would consider at this point, but for now I'm just sort of watching unemployment. I didn't just sell all those stocks. I put in 10% drop sell orders and every one of them triggered. In most cases I put in 10% and 15% selling half at each point.

I did a couple of more looks at charts and these are two I found interesting from the max s&p500 and DJIA. I've already stated in the previous post (October 10) that it looks like we are in a 30 year bubble since 1985. I'm trying to figure out where the bottom might be and I'm really most interested in unemployment as the measure for recovery and bottom, but for now looking at these two images makes me think it can go a whole lot lower.

DJIA 1995-2008

S&P500 1995-2008

"A" is where we are at currently. "B" is where we were in 2003 after the dot com crash. This is interesting to me because the 2003 dip was caused by two things. A big bubble burst in the dot com industry and 911. Given that the 911 event was a short term cycle and not completely related to the economy I'm looking at position A and B on the charts and thinking that current events are much much worse than they were in 2003. So, are we at the bottom? I seriously doubt it since at this point we have virtually every industry in a significant down turn. To me that should look a lot worse on the chart than a dot com burst and a terrorist event. All signs point to this being a recession that is much worse than the 2003 recession and unemployment is looking to be worse than it was in 1992 and some are saying we have to go back to 1980s to see this sort of magnitude. So, will it go below where were were at "A" on the chart? I don't see how it can hold the current level. That is really disappointing.

So why have a "C" on the chart? I keep thinking about unemployment levels being the lowest they've been in 14 years and that puts us at "C" on the chart. That doesn't mean that the economy is smaller in any way, but it does point to a place on the chart. Looking at my previous post, my pen was pointing at 6000 on the DJIA for the non-bubble growth line and if that is the mean then I guess I would expect a true correction to go below that line and 4000 does seem like a balancing point on the two curves.

It doesn't look pretty and it isn't very precise, but it does make some sense to me at this point in the procession.