Sunday, January 17, 2010

Current Dow Rally Below Average In Magnitude And Duration

As a follow up to my post yesterday, Positive Equity Market Returns Probable In 2010, the current advance in the Dow Jones Industrial Average (^DJI) is below average in both magnitude and duration as compared to past rallies. The Chart of the Day chart service looked at the prior 27 market rallies since 1900. They note:
  • most major rallies (73%) resulted in a gain of between 30% and 150% and lasted between 200 and 800 trading days.
  • the current Dow rally (hollow blue dot labeled you are here) has entered the low range of a "typical" rally and would currently be classified as both short in duration and below average in magnitude.

If company earnings reports meet or exceed expectations on the whole this reporting period, the market could continue to grind higher.

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