Two Great Market Bounces

The following charts (click to enlarge) provide a simple comparison between the big stock bounce that occurred in the wake of the DOW crash of 1929 and the bounce we saw yesterday 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 that they can be compared side-by-side.

The lower bar chart plots the cumulative percentage change since the start of each bounce.

The S&P 500 was up over 42% in just about 120 trading days… a very aggressive run with an obvious note of mania to it… and wholly comparable to yet even notably stronger than the price movement seen in the 1930s-era DOW rally.

At this point for the 30s-era DOW, the bull-run was over as the bear trend resumed in earnest… yesterday though, the Bull was on the move… how long will this boom last?

Only time will tell… But for now, let’s continue to keep a watchful eye…

Comments

[johnm]

Back then we were on a gold standard. It is more informative to compare the DOW chart priced in ounces of gold. If you print enough paper bills everything can go to the moon.

2009 Sep 09 08:59 AM

[NUCLEAR1929]

this bounce now is already over the top, in 1929 there was no hedge funds and shorting was done as an agreement between holder of stocks and person who borrowed to return later the difference if stock would rise.
With today's leverage it's much worse to the downside, it's enough one day down 3% on DJIA and all funds will sell into the falling index.
6 months rally, 6 days and it's back at 6600.

2009 Sep 09 09:05 AM