Picture du Jour: Dow rally in perspective

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The Dow Jones Industrial Average has recorded a gain of 62.1% since the current rally commenced on March 10. In order to put the rally in historical perspective, Chart of the Day has provided a handy graph on which all major market rallies since 1900 are plotted.

Each dot on the graph below represents a major stock market rally as measured by the Dow and shows the Average began a major rally 27 times over the past 110 years, i.e. an average of one rally every four years.

Most major rallies (73%) resulted in a gain of between 30% and 150% (29.8% to 150.5% to be exact) and lasted between 200 and 800 trading days (9.5 months to 3.2 years) – highlighted below with a blue-shaded box.

“As it stands right now, the current Dow rally (hollow blue dot labeled ‘you are here’) has entered the low range of a ‘typical’ rally and would currently be classified as both short in duration and below average in magnitude,” concluded Chart of the Day.

Some food for thought as we ponder whether we are dealing with a primary bull market or a bear market rally …

chartofday160110

Source:  Chart of the Day, January 15, 2010.

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