51.68% in 165 Days 26 comments
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The S&P 500 is now up 51.68% in the 165 calendar days since its March 9th closing low. Below we highlight all "official" bull markets for the S&P 500 since 1927 (a rally of at least 20% that was preceded by a decline of at least 20% is considered a bull market).
Many bears believe the recent gains are just a rally within a longer-term downtrend. But the argument that we'll eventually head lower than the March lows is becoming a harder and harder sell. One argument the bears use is that we saw a number of similar bear market rallies that were this extreme during the overall 86% decline that the market saw from September 1929 to June 1932. However, as shown in the table below, the current rally is now bigger and longer than any of the rallies seen during the 1929 to 1932 crash. The biggest rally during the '29 to '32 period was 46.77% over 148 days. The current rally is up 51.68% over 165 calendar days.
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This article has 26 comments:
My broker friends are telling me that they now have customers calling asking for suggestions on buying back into the market, when those same customers swore off stocks in Jan., Feb., March. To me, it looks like the market is still climbing that wall of worry, bringing more cash in off the sidelines, but who knows how long that will last. I am still concerned about October, and will feel better if we get through that month without significant declines.
If that became a trend and happened 4 more times, over say the next 3 years or so, you know what is left of your $1,000,000 investment?
Answer = $237,304
So, down 50 %, then up 50% = Bad for your Wealth!!!
Can that happen?
Now there is a $64 Trillion question and the short answer is YES!
For the slightly longer version, see my post at - seekingalpha.com/artic...
From a historical perspective all you can really say is that yes we do have rallies in a bear market. This rally could go higher than any one has imagined with all of the intervention that is occuring.
We are just entering the B wave down and their is another C wave up. If I am correct we will see between 10,400 and 11,250 before we are done and that will happen before thanksgiving.
Show us the volume.
Looks pretty darn ( statistically ) similar to me! The exact opposite of your conclusion...suggest you brush up on your math!
start with $1 to invest in 1990 by 1999 you have $2, now the dotcom bubble bursts your portfolio drops 50% and your left with $1, back to square one, well then you hang in there and your investment grows by 50% through 2008 so your up to $1.50, better then nothing though your only up 50% in 2 decades, then we get the 2008 collapse down another 50% in 6 months to $.75, so now your down 25% from your initial investment of $1 in 1990, but wait if you can stay fully invested and all your positions move with the market your up 50% in six months so you would now have $1.125 in your account, so since 1990 your original investment of $1 has grown by 1/8 in just under 2 decades. Thats is reality for most investors and to think they dont know is foolish and to think they will run back into the market again is also foolish, without the Retail Pawns it will be hard for Wall Street to continue playing the market manipulation game much longer
Just because this rally has outdone that one by nearly 5%, doesn't mean, with any certainty, that the bull is dead. It's just a talking point made out of an assumption. And if the assumption turns out to be wrong, the author will be ever so embarrassed. If, on the other hand, the author turns out to be right, they will be heralded as a hero for having "guessed" correctly.
Personally, I don't like to reward guesses, even when they turn out to be lucky ones.
On Aug 22 10:06 AM Mark Bern wrote:
> Interesting article and I really loved the chart! If I read it correctly,
> then as commenter cocomurph points out, the similarity of our current
> situation could just as easily put us at the nearly the same point
> as the market was in at the end of the 11/13/1929 to 4/10/1930 rally.
> I don't think I would have liked being talked back into the market
> at that point.
>
> Just because this rally has outdone that one by nearly 5%, doesn't
> mean, with any certainty, that the bull is dead. It's just a talking
> point made out of an assumption. And if the assumption turns out
> to be wrong, the author will be ever so embarrassed. If, on the
> other hand, the author turns out to be right, they will be heralded
> as a hero for having "guessed" correctly.
>
> Personally, I don't like to reward guesses, even when they turn out
> to be lucky ones.
On Aug 22 09:04 AM Dave Wrixon wrote:
> Bull markets have volume.
>
> Show us the volume.
Some one said - show me the volume - well here is the volume or rather "cummulative volume index".
www.freestockcharts.co...
On Aug 22 02:45 PM E Nuff Sed wrote:
> Still continuing to argue with a recovery, eh?
>
> Some one said - show me the volume - well here is the volume or rather
> "cummulative volume index".
>
> www.freestockcharts.co...
The Geoffster; I'm afraid I can't agree with you that one can't "time" the market. Lets say that an investor got really skittish, and had bailed at 732 on the S&P (10% above the infamous March intraday low of 666). He/she gets back in at 800, figuring the worst isn't going to happen. The investor bails again during the "head and shoulders" pattern, back at 925 on the S&P, thinking the market was "overbought", as did many. So the investor again has left "money on the table". This investor picked neither "the" bottom, nor "the" top, but I'm willing to wager they're not crying too hard about it.
analysis try a qualitative analysis.
1. Volume is low over all and historically.
2. NDX typically leads any lasting rally,
3. The underlying economy is not likely to produce the earnings projected (high probably multiple expansion is unwarranted).
4. The depth of the retraction into March was over sized expect the bounces to be equally exotic.
5. The liquidity poured into the market is 7-10 times the amount seen in any other recession - where did it go beside bank values? stocks.
6. Be patient and careful, momentum is fading the market may be out of fuel.
For those who think this market is even remotely close to reasonable valuations, we suggest they read Doug Short's accurate summary of historical stock market valuations. See:
www.dshort.com/article...
As per Doug Short's great summary, it does not mean the market cannot go higher temporarily - based on the momentum and liquidity trading that is apparently happening - but it does clearly show that the market is significantly overvalued by any historical comparisons with previous recessions.
Thus the only logical conclusion is that (unless the market is somehow different this time-and it never has been different before-despite bull and commentator claims to the contrary) the market will endure at least one more very serious selloff at some point in the relatively near future(or alternatively there will be some magical hugh increase in corporate earnings, which is highly unlikely). Thus maybe one can trade this market and make some money, but past historical comparisons indicate there will be much better buying opportunites at much better valuations somewhere out there in the relatively near future.
On Aug 22 07:37 AM redbaron wrote:
> Great article, with lots of good data.
>
> My broker friends are telling me that they now have customers calling
> asking for suggestions on buying back into the market, when those
> same customers swore off stocks in Jan., Feb., March. To me, it looks
> like the market is still climbing that wall of worry, bringing more
> cash in off the sidelines, but who knows how long that will last.
> I am still concerned about October, and will feel better if we get
> through that month without significant declines.
Japan has languished because they refused to deal with their economic colapse according to reality. Aren't we doing exactly the same? Did the investors who created this mess lose their money? Not yet. But a lot of others have. Have the bad loans been dealt with? Not yet. And we all know it. What has happened is the Fed has pumped dollars into the "too-big-to-fail" companies (the one's who should of lost it all) and the government has handed money to it's citizens to "stimulate" things.
Oh yes, and the media has pumped persistently positive news to the citizens designed to change moods rather than report fact.
Bernanke thinks he has it figured out. That he can engineer a graceful recovery and save the world. I think he's convinced has a lot of new tricks up his sleave that will make it different this time. I'm just afraid that his power is still inferior to the market's even though he has a infinite number of dollars to play with.
And when the market decides to take over once again, look out below.
I read the comments on here and I can hear the trauma left over from the collapse last fall. Our brains are hardwired to react this way to trauma and loss. Our brains subconciously tell us - Avoid that painful experience at all costs, look out for it to strike again, expect it to strike again and be ready to avoid it. Millions of years of evolution have made our thought processes react this way to trauma and loss because it was necessary for survival. These still serve a valuable purpose, however it can lead down irrational paths. take Sept. 11th for example. After that trauma our country created the laughable homeland security deparment with the red and green stoplight alerts. It was a giant waste of money and time, but we did it so we would avoid the danger and be ready if it struck again. Had we immediately boycotted oil and set on a course for using some type of energy other than what lies in the middle east we would have already won the "war on terror" because terrorists wouldn't have a pot to piss in. But we missed that opportunity and now look at us. Mired in the morass of being chained to rising oil prices, falling dollar values, and china growing in might. We must be bold, innovative and seize opportunity. Take risks! For otherwise we are left to cower in fear and build defenses while the more adaptable slowly enact our perishment from this earth.
On Aug 22 06:50 PM KSengineer wrote:
> Was there a Goldman Sachs in 1929-1932 with a direct dollar pipeline
> to the Fed? Much of what we see today, IMO, is smoke and mirrors
> designed to make us feel good. In today's America, feeling good is
> more important than reality. Or, perhaps we believe feelings create
> reality.
>
> Japan has languished because they refused to deal with their economic
> colapse according to reality. Aren't we doing exactly the same? Did
> the investors who created this mess lose their money? Not yet. But
> a lot of others have. Have the bad loans been dealt with? Not yet.
> And we all know it. What has happened is the Fed has pumped dollars
> into the "too-big-to-fail" companies (the one's who should of lost
> it all) and the government has handed money to it's citizens to "stimulate"
> things.
>
> Oh yes, and the media has pumped persistently positive news to the
> citizens designed to change moods rather than report fact.
>
> Bernanke thinks he has it figured out. That he can engineer a graceful
> recovery and save the world. I think he's convinced has a lot of
> new tricks up his sleave that will make it different this time. I'm
> just afraid that his power is still inferior to the market's even
> though he has a infinite number of dollars to play with.
>
> And when the market decides to take over once again, look out below.
On Aug 22 10:14 AM sether wrote:
> Why should I care what a couple of 15 year-olds have to say?
This is what is called the silent stock market crash...Remember in terms of hard assets we are in a bear market since the year 2000...
On Aug 23 04:29 AM Faisal Humayun wrote:
> These kinds of strong moves on either sides tell us the abnormal
> times we are living in...Also I would like to point out that if you
> go for massive quantitative easing then the S&P can go to 2000
> also in a matter of time...But that does not mean that everyone becomes
> rich..In real terms and against hard assets like gold we would still
> be down...
>
> This is what is called the silent stock market crash...Remember in
> terms of hard assets we are in a bear market since the year 2000...
www.scribd.com/doc/182...
This chart compares the segments of the worst beat markets.
On Aug 22 04:29 PM untrusting investor wrote:
> Interesting how the authors choose to ignore the 100% plus rallies
> in their chart in the mid-1930's but choose to focus on only the
> four rallies in the very early 1930's. Several other ST rallies in
> their charts do not support their conclusion, so guess it just depends
> on how you want to try and spin your conclusions and which particular
> data you choose to focus your spin on.
On Aug 22 10:04 AM enigmaman wrote:
> Hypothetical scenario
> start with $1 to invest in 1990 by 1999 you have $2, now the dotcom
> bubble bursts your portfolio drops 50% and your left with $1, back
> to square one, well then you hang in there and your investment grows
> by 50% through 2008 so your up to $1.50, better then nothing though
> your only up 50% in 2 decades, then we get the 2008 collapse down
> another 50% in 6 months to $.75, so now your down 25% from your initial
> investment of $1 in 1990, but wait if you can stay fully invested
> and all your positions move with the market your up 50% in six months
> so you would now have $1.125 in your account, so since 1990 your
> original investment of $1 has grown by 1/8 in just under 2 decades.
> Thats is reality for most investors and to think they dont know is
> foolish and to think they will run back into the market again is
> also foolish, without the Retail Pawns it will be hard for Wall Street
> to continue playing the market manipulation game much longer