Saturday, March 16, 2013

Late In The Market's Advance But Not The End?

This week's market chart from Chart of the Day is suggestive of a further market advance if history is any guide. Chart of the Day states:
"Today's chart illustrates rallies that followed massive bear markets. For today's chart, a 'massive' bear market is defined as a decline of greater than 50%. Since the Dow's inception in 1896, there have been only three bear markets whereby the Dow declined more than 50% (early 1930s, late 1930s until early 1940s, and during the recent financial crisis). Today's chart also adds the rally that followed the dot-com bust during which the Nasdaq declined 78%. The current Dow rally has followed the post dot-com bust rally of the Nasdaq that began back in 2002 fairly closely and held to a general post-massive bear market rally pattern -- rally during the first 300 trading days, trade in a relatively flat choppy manner up until around 600 trading days and then re-embark on the second leg of the rally. History may not repeat, but it rhymes."
From The Blog of HORAN Capital Advisors

1 comment :

Andrew said...

A very interesting chart although it would be nice to see what the post peak decline was that follows. Also, for the average investor (any investor?) trying to hit the top is tough. The slides seem to happen a lot faster than the grind higher. So is there enough left to play for or should the average investor start to scale back equities exposure now and if so where to next??? The current "artificially" Fed-created conditions may also mean the outcome is very different. The merest hint of a scale back put the markets into paroxysms of worry a few weeks back. I think I shall just carry on worrying :-)