Technicians have been quick to point out the eerie similarities between the US markets performance, over the last year, to the performance of markets in 1937 and 1938. Poor performance numbers in September and October of 1937 look similar to those of the last quarter of 2008.

In 1938, the Dow Industrials went through a mild correction in September followed by a strong October rally that eventually ended with a November top. Sound familiar? In 2009, the US markets had only the smallest correction in September, followed to this point, by a fairly robust October.

One could argue that the stock market, as a leading economic indicator, is simply predicting a significant upturn in economic activity. Climbing a wall of worry so to speak.

But, observes Lawrence McMillan (www.optionstrategist.com), if “the economic data refuses to improve, the market realizes that it has overshot on the upside and another, slower, bear market unfolds.”

Certainly the sell-off in Goldman Sachs last week, despite a blow out quarter, adds support to that argument. When it comes to earnings, it may no longer enough to knock the ball out of the park. You may need to knock the cover off the ball!

Whether this time is different or history repeats itself, you might consider buying some protection. The cost of insurance has come down as measured by the Montréal Exchange Volatility Index (closed on Friday at 21.98). These are levels not seen since before the crisis began.

The best way to buy insurance is to purchase puts on the iShares S&P TSX 60 Index Fund (TSX: XIU, closed Fridat at $17.20). Look at buying the XIU December 17 puts at 60 cents.