A Look at Dow Historical Bear Markets

With the market on edge and earnings season upon us posts have been light recently.  In the following chart and table we look at bear markets in the Dow Jones Industrial Average since the end of World War II (bear market being defined as a 20% decline or more from peak to trough). 

The chart below shows the duration of the decline (0 is the start and 10 is the end), and where the market was most oversold, where the worst day occurred, and where the worst 10-day A/D on the NYSE was.

click to enlarge

At first glance it may appear as though the end of a bear market is usually characterized by a final dramatic sell-off, but in reality this is only the case about 50% of the time.  (The data was taken from a bulletin distributed by Birinyi Associates on 7/7/08 and 7/2/08 was the low close at the time.  6/6/08: -3.13% remains the worst day for the DJIA in the current bear cycle.)

Comments

[notsosmart:]

these traditional historic facts,figures,charts etc may be meaningless in this new fast unethical,greedy world.anybody care who won the last blue ribbon for fastest ocean crossing liner before they sank under the weight of jet travel.what happenedafter ww2 & the world today is just apples & oranges.we actually now have conservative socialism under a republican administration.histori... charts??

2008 Jul 12 11:56 AM

[adan:]

really interesting info, thanks!

2008 Jul 12 06:06 PM

[mkreisel:]

The world has always been an unethical and greedy place. Be glad you didn't live during the time when bucket shops and insider pools were regularly cleaning small guys out, or during the time when corporations used thugs to break up workers making legitimate demands.

Some people just don't have a realistic expectation of the past.

As late as 1848, Germany was executing people through "breaking on the wheel".

As late as 1905, China was executing people through "death by thousand cuts"!

2008 Jul 13 12:56 AM