Paul D. Castro, CFA

Today’s Bull Market Is Tomorrow’s Bear Trap

I agree with those here who dispute the basic premises of this article. In fact, as per research done by Bespoke (see link below) 300 pt rallies in the DJIA have in the past occurred at the start of big uptrends.

bespokeinvest.typepad....

Since 1956 the DJIA has completed 16 downtrends (the current downtrend is the 17th). Those 16 downtrends (series of lower pullback low's and lower rally high's) have averaged 370 calendar days each and losses of each. Measuring from the peak on 10.09.07 to the most recent low on 07.15.08, the current downtrend has lasted 280 calendar days and evaporated 23% of the DJIA's value.

So far the current downtrend has been fairly typical and, if the historical averages are any guide, is pretty close to being over.

See my blog for similar analyses I conducted on the Russell 2000, the Nasdaq Composite and the S&P500.

www.vestopia.com/IDs/P...