Do you remember the time.. When you fell in love..

The above chart is of Dow Jones Index from 1st Jan 2020 to now. The market almost has a V shaped recovery and everybody is talking about how it can happen with the man on main street  fighting pandemic, fighting racial abuse, scared of losing his/hers job. etc etc.  

VIX the fear index which was almost at its bottom at 11.80 something rose to 85.47 on March 18 showing the fury of the viscous down move. But since March 20 it has been on the down move and as of June 3 its trading at 24.47 right at the 200 day moving average. As you can see from the above chart, Dow Jones Index is right at the 200 day Moving average. 

But as Goerge Santayana has said those who forget their past are condemned to repeat it.. 

So here's some history for all of us that we should remember and be wary of. The below is the chart of Dow Jones Index from 1929-1930. You can see that DJI crashed in October 1929 and bottomed out in November of 1929 and had very similar looking recovery for next 4 months and then came and kissed the 200 day moving average on April 16, 1931 and sold off and finally bottomed out on July 8, 1932. 

I am not saying that will happen this time too with such a huge Federal stimulus and pending Presidential election but once should be wary of any sell off as the situation on Main street is very ripe for repeating that situation.