Historical Trends Suggest that Market's Due for a Fall

6/6 - "As much as the financial media likes to refer to the Bear Stearns bailout and the Federal Reserve’s other recent actions as unprecedented, the reality is that similar events have occurred in the past. And history offers some striking advice as to what to expect for the remainder of 2008.

There have been three March financial crisis and subsequent interventions in the 20th century alone—1907, 1929, and 1980...The intervention marked a temporary bottom followed by a brief two to three month rally, then a very ugly fall (literally and seasonally).

Even if we overlook the intervention, the market has followed a similar pattern— brief summer rally followed by an awful fall— in years in which the first quarter was soft or recessionary. It did this in 1990, 2000, 2001, and 2002. Thus far, the market has followed this pattern to a “T”— the first quarter for 2008 w...