Picture du Jour: Stock market rally long in the tooth

By Prieur du Plessis, on October 31st, 2009 posted in: Investment, Markets, Money Leave your comment

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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.

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

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