Two Big Bounces: 1929 vs. 2009

The following chart is a simple comparison between the big stock bounce that occurred in the wake of the Dow crash of 1929 and compares it to the bounce we are seeing today in the S&P 500 index.

The method of alignment was simple… take the first definitive up trading day off the bottom of the preceding bear market low and set that as the start of the series… then simply re-base both series to a value of 100 so they could be compared side-by-side.

Our current rally has a note of mania to it… It’s almost too good to be true…

I’m not saying it’s going to happen… Just keeping a watchful eye…

click to enlarge

Comments

[User 208606:]

what a useless article

Jul 29 02:24 AM

[ReppinFreedom:]

I personally think this recent mini rally is going to be a triangle after looking over the technicals and the macro news coming out. (Jobless claims increasing again, etc...)

Silver, Oil, and the Vix signals are confirming my thoughts that the market top was 892. I think we could have made it higher if it wasn't for the Commodities Futures trading rules BS...

Disclosure: Purchasing 170 SDS September 53 calls tomorrow at market open. Additional 300+ call purchase Friday after GDP report.

875 here we come again...

Jul 29 03:22 AM

[ReppinFreedom:]

Oops, typo... I meant 982 as the market top.

Jul 29 03:25 AM

[Denis Gould:]

The world has missed this rally from the very beginning and continues to look desperately for reasons why it will fail. Until that changes it will carry on up even in the absence of fundamental support

Jul 29 04:21 AM

[cocomurph:]

Can you say "data mining"?!

Jul 29 07:32 AM

[The Hammer:]

Since this is the largest rebound off the bottom ever, one has to wonder how long it can last. Recent article:
"State Street Index: Investor Confidence Surges to Five Year High"
Institutional Investors jumping in. Is this just another indicator that we are near the end of this big pop?
I have decided that it is and have been slowly selling things into this huge rally.
How can the economy come back to its former levels of economic activity with all this phoney credit expansion and debt no longer around?

Jul 29 07:38 AM

[Davewmart:]

Anyone have a link to the two guys who have done loads of charts drawing out the parallels between 1929 and on and 2007 and on?
Darned if I can locate it in my bookmarks, but it gives a longer time line than provided here, and eerily the series bounced at exactly the same point, before really taking the dive down to very low levels.

Jul 29 08:27 AM

[RoadtoSerfdom:]

davewmart-- perhaps you are thinking of dshort.com

Jul 29 01:44 PM

[buoy:]

The Great Depression comparisons are truly getting old.

Jul 29 05:55 PM

[perceptions...:]

"Our current rally has a note of mania to it… It’s almost too good to be true…"

Seems like good advice!

However, I would have left out "almost".

Jul 29 08:28 PM

[johnny doe:]

Davewmart , I believe this is the link you had in mind:-

www.businessinsider.co...

On Jul 29 08:27 AM Davewmart wrote:

> Anyone have a link to the two guys who have done loads of charts
> drawing out the parallels between 1929 and on and 2007 and on?<br/>Darned
> if I can locate it in my bookmarks, but it gives a longer time line
> than provided here, and eerily the series bounced at exactly the
> same point, before really taking the dive down to very low levels.

Jul 30 02:39 AM

[Davewmart:]

Road to Serfdom and JohnyDoe:
Thanks for the links. The latter did indeed lead me through to the article I was thinking of, by Eichengreen and O'Rourke:
www.voxeu.org/index.ph...

Jul 30 07:53 AM

[momomiester:]

I am not really bullish here but this comparision to 1929 on a chart is kind of silly. We did not have such a diversified economy back then. There were no computers, health care, entertainment was at min. Mutual funds didn't exist and people didn't have financial planners or other long term instruments geared for retirement. The economy during those days was mainly heavy industry and manufacturing so to assume that the market will do the same is really pushing it. Plus, the socialized part of our economy will provide some lift in certian areas. I just think things are more complex than that.

Jul 30 11:50 AM