Top technician: Yes, 2013 does look like 1987
Marc Faber frightened the market with his call that 2013 is looking a lot like 1987. But while the Gloom, Boom & Doom Report publisher has been quite bearish for some time, one top technician now says that the charts back up the unsettling comparison Faber made on Thursday.
(Read more: Marc Faber: Look out! A 1987-style crash is coming)
Carter Worth of Oppenheimer starts out with a simple premise: "Tops have a look and feel over and over and over."
Citing the same warning sign Faber pointed to, Worth said on Friday's "Options Action" that a top tends to come "as breadth starts to wane—and then the trouble ensues." With that in mind, he took to the charts to compare the current market action to the charts leading up to historical tops in the market.
Worth's first comparison is to the two years leading up to May 2011, when the market dropped on the S&P downgrade of the U.S. credit rating.
Worth notes the similarity between that chart and today's, noting that in 2011: "Basically we plunged, from May to August, about 20 percent." He added: "Now that's a fairly benign thing—20 percent—but it's the shape and look of the ascent that precedes the drop that's important."
Building on his case, Worth noted a similarity between August 2011 to August 2013, and the two years leading up to the decline of 1968.
"In 1968, we had a very similar two-year trajectory, just like the one we're in now, and then the trouble started," Worth said, presenting another chart that looks strikingly similar to our present situation. "In this case, it was in December of 1968, and over the next 18 months, we dropped 40 percent," he said.
Worth then looked at the chart of the two years leading up to the infamous crash of 1987.