How does the stock market rally since the March 9 low compare with the 1929-1932 bear market - which also included bank failures, bankruptcies, severe stock market declines, etc.?

For some perspective, Chart of the Day provided the graph below, illustrating the duration (calendar days) and magnitude (percentage gain) of all significant Dow Jones Industrial Index rallies during the 1929-1932 bear market (solid blue dots).

As the chart shows, the duration and magnitude of the March 2009 rally of the Dow (hollow blue dot labeled “you are here”) are longer than any that occurred during the 1929-1932 bear market. Add an ugly technical picture and stretched valuations, and it is not difficult to conclude that it is prudent to be on the sidelines at the moment.

chartoftheday1

Source: Chart of the Day, October 30, 2009.

Did you enjoy this post? If so, click here to subscribe to updates to Investment Postcards from Cape Town by e-mail.

The Financial Ad Trader
The Financial Ad Trader - banner ads

 Email  Digg  Del.icio.us  Technorati  Stumble  Reddit  Facebook