Global Economic Intersection
Advertisement
  • Home
  • Economics
  • Finance
  • Politics
  • Investments
    • Invest in Amazon $250
  • Cryptocurrency
    • Best Bitcoin Accounts
    • Bitcoin Robot
      • Quantum AI
      • Bitcoin Era
      • Bitcoin Aussie System
      • Bitcoin Profit
      • Bitcoin Code
      • eKrona Cryptocurrency
      • Bitcoin Up
      • Bitcoin Prime
      • Yuan Pay Group
      • Immediate Profit
      • BitQH
      • Bitcoin Loophole
      • Crypto Boom
      • Bitcoin Treasure
      • Bitcoin Lucro
      • Bitcoin System
      • Oil Profit
      • The News Spy
      • Bitcoin Buyer
      • Bitcoin Inform
      • Immediate Edge
      • Bitcoin Evolution
      • Cryptohopper
      • Ethereum Trader
      • BitQL
      • Quantum Code
      • Bitcoin Revolution
      • British Trade Platform
      • British Bitcoin Profit
    • Bitcoin Reddit
    • Celebrities
      • Dr. Chris Brown Bitcoin
      • Teeka Tiwari Bitcoin
      • Russell Brand Bitcoin
      • Holly Willoughby Bitcoin
No Result
View All Result
  • Home
  • Economics
  • Finance
  • Politics
  • Investments
    • Invest in Amazon $250
  • Cryptocurrency
    • Best Bitcoin Accounts
    • Bitcoin Robot
      • Quantum AI
      • Bitcoin Era
      • Bitcoin Aussie System
      • Bitcoin Profit
      • Bitcoin Code
      • eKrona Cryptocurrency
      • Bitcoin Up
      • Bitcoin Prime
      • Yuan Pay Group
      • Immediate Profit
      • BitQH
      • Bitcoin Loophole
      • Crypto Boom
      • Bitcoin Treasure
      • Bitcoin Lucro
      • Bitcoin System
      • Oil Profit
      • The News Spy
      • Bitcoin Buyer
      • Bitcoin Inform
      • Immediate Edge
      • Bitcoin Evolution
      • Cryptohopper
      • Ethereum Trader
      • BitQL
      • Quantum Code
      • Bitcoin Revolution
      • British Trade Platform
      • British Bitcoin Profit
    • Bitcoin Reddit
    • Celebrities
      • Dr. Chris Brown Bitcoin
      • Teeka Tiwari Bitcoin
      • Russell Brand Bitcoin
      • Holly Willoughby Bitcoin
No Result
View All Result
Global Economic Intersection
No Result
View All Result

Dow Bull Drops to Fifth Place

admin by admin
October 14, 2011
in Uncategorized
0
0
SHARES
1
VIEWS
Share on FacebookShare on Twitter

by Doug Short

Originally posted at Advisor Perspectives/dshort.com

bull-and-bear

Here is the latest look at the “Sweet Sixteen” Dow recoveries adjusted for inflation/deflation I’ve been illustrating from time to time over the past two years. The charts below compare the current Dow recovery since the March 2009 low with fifteen other major recoveries dating from the origin of this legendary index in 1896. (See the footnote for my selection criteria.)At this point the Dow is 655 market days beyond the 2009 low. The index has slipped a notch to fifth place in our Sweet Sixteen competition with a real gain of 62.8% off the low. On our last check, on August 3, the real Dow was up 71.2%. The time high, nominal and real, since the 2009 trough was on April 29th, when the real gain was 85.1%. The nominal gain was 95.7%, but since we’re comparing such a diverse set of market eras with such a wide range of inflation/deflation, the real numbers provide greater comparative insights.


Click to View
Click for a larger image


Why is inflation adjustment useful for this overlay? Throughout history the cost of living has undergone some dramatic changes, as this chart illustrates. High inflation, such as during the 1974 recovery, gives an exaggerated sense of price growth. Deflation, which accompanied several of the earlier market cycles, makes recoveries appear weaker. By adjusting for the inflationary/deflationary cycles, we get a clearer sense of the real value of the index price across time.

Now let’s extend the time frame. Here is a set of charts with increasing numbers of market days: 500, 1000, 2000, 3000, 4000, and 5000. Depending on the historical period, the number of market days in a year varies slightly. But it rounds out to about 250 market days per year. So the time frames in this series are approximately 2, 4, 8, 12, 16, and 20 years. The series features the 500-day chart with and without the 1932 recovery, which was a quite an outlier. At 1000 market days, the 1932 recovery continues to lead the pack. But at 2000 days (about eight years), the recovery after the 1921 low has risen dramatically. Of course, with the benefit of hindsight, we know that this remarkable advance was the last stage of the Roaring Twenties stock bubble, as the 3000-day (12-year) overlay makes clear. At 4000 days (about 16 years), the recovery from the low in 1982 is approaching the final surge of the Tech Bubble. The 5000-day chart shows how the Tech Bubble played out for the Dow, topping out in January 2000 after a brief scare in 1998 triggered by the Long-Term Capital Management Crisis (that dip after the 4000-day mark). The chart below shows the 5000-day (approximately 20-year) overlay:


Click to View
Click for a larger image


Here is a table summarizing the comparative performance of these 16 Dow recoveries at seven points in time.



The overlay charts give visual evidence of the wide range of recovery patterns. The table helps quantify the magnitude of the difference. Two of the earlier recoveries, 1903 and 1914, and two of the later recoveries, 1962 and 1970, subsequently failed. Likewise the 1938 and 1974 rallies failed before being rescued by later recoveries. This last observation touches on an important aspect of the overlay charts. As the timeframe increases, the same recovery may appear in multiple data series.

Cyclical and Secular Markets

How will our current recovery fare during the coming months and years? History shows us that some recoveries are the beginnings of secular bull markets. Others turn out to be cyclical bear market rallies. If we look at the broader S&P 500, we see that the current market is overvalued by the indicators I routinely follow here. The Dow recovery indeed has more in common with recoveries in the earlier decades of its existence. Of the first nine rallies in the table above, only one other (June 1962) occurred after the middle of the last century.

The recovery since March 2009 is the second in the first decade of the 21st century, and it started from a lower low. As we can see in the inflation-adjusted chart below, history has witnessed several other examples of multiple recoveries in relatively close succession with lower starting points. Will the current recovery be another such example? Only time will tell.


Click to View
Click for a larger image



Footnote on Selecting the Sixteen: My initial plan was to overlay all the Dow rallies following a 30% or greater decline. Using the traditional 20% decline associated with bear markets would have made the chart too busy, and it occasionally runs against conventional wisdom. For example, the Tech Crash in the Dow consisted of 3 baby bears (if you round up the 19.91% decline in January-March 2000) separated by two rallies over 20%. I consider it a single bear market with a decline of 37.85% and thus included the rally that began in 2002. I also treated the Crash of 1929 as a single bear decline, even though the 20% rule would have divided it into six bear markets with five intervening rallies. Likewise, and more to the point for the overlay, I treated the rally after the 1932 low as a single rally, even though the 20% rule would see it as an oscillation between three bull and bear markets.

Another liberty I took in selecting recoveries for the overlay was to include two rallies after declines of less than 30%. In both cases, they marked the beginning of a new economic era. One is the recovery that began in 1949 after the 23.95% post-war decline. The 12-year, 355% advance that followed warranted inclusion. Likewise I added in the first 500 days of the 250% rally that started in 1982 after a 24.13% decline. The 1982 recovery brought an end to the decade of stagflation and launched the great Boomer bull market.


Related Articles

Investing Blog articles by Doug Short

About the Author


Doug Short is the founder of dshort.com, now more than five years old, which specializes in detailed graphical analysis of markets and economic factors. He has a Ph.D. from Duke, has been a full professor at North Carolina State University and has held positions with IBM and GlaxoSmithKline . Stay in touch:
Email:
[email protected]


 

 

 

 

Previous Post

U.S. Birth Rate Down

Next Post

People vs. Business

Related Posts

Dogecoin Gained 50% In 3 Weeks, What Pushed It?
Econ Intersect News

Dogecoin Gained 50% In 3 Weeks, What Pushed It?

by John Wanguba
August 17, 2022
What Happens To Gold Prices As Attention Shifts To Fed Minutes?
Economics

What Happens To Gold Prices As Attention Shifts To Fed Minutes?

by John Wanguba
August 17, 2022
UK Inflation To Reach 15% in Early 2023 – Citi Prediction
Economics

UK Inflation To Reach 15% in Early 2023 – Citi Prediction

by John Wanguba
August 17, 2022
UK Fuel Exports To Netherlands Surged By 67% In June – HMRC Data
Business

UK Fuel Exports To Netherlands Surged By 67% In June – HMRC Data

by John Wanguba
August 17, 2022
Amazon and Waitrose Block Customers For Complaints And Sending Back Too Many Items
Business

Amazon and Waitrose Block Customers For Complaints And Sending Back Too Many Items

by John Wanguba
August 17, 2022
Next Post

People vs. Business

Leave a Reply Cancel reply

Your email address will not be published. Required fields are marked *

Browse by Category

  • Business
  • Econ Intersect News
  • Economics
  • Finance
  • Politics
  • Uncategorized

Browse by Tags

adoption altcoins banking banks Binance Bitcoin Bitcoin adoption Bitcoin market Bitcoin mining blockchain BTC business China Coinbase crypto crypto adoption cryptocurrency crypto exchange crypto market crypto regulation decentralized finance DeFi Elon Musk ETH Ethereum finance funding inflation investment market analysis markets Metaverse mining NFT NFTs nonfungible tokens nonfungible tokens (NFTs) price analysis regulation Russia technology Tesla the UK the US Twitter

Archives

  • August 2022
  • July 2022
  • June 2022
  • May 2022
  • April 2022
  • March 2022
  • February 2022
  • January 2022
  • December 2021
  • November 2021
  • October 2021
  • September 2021
  • August 2021
  • July 2021
  • June 2021
  • May 2021
  • April 2021
  • March 2021
  • February 2021
  • January 2021
  • December 2020
  • November 2020
  • October 2020
  • September 2020
  • August 2020
  • July 2020
  • June 2020
  • May 2020
  • April 2020
  • March 2020
  • February 2020
  • January 2020
  • December 2019
  • November 2019
  • October 2019
  • September 2019
  • August 2019
  • July 2019
  • June 2019
  • May 2019
  • April 2019
  • March 2019
  • February 2019
  • January 2019
  • December 2018
  • November 2018
  • October 2018
  • September 2018
  • August 2018
  • July 2018
  • June 2018
  • May 2018
  • April 2018
  • March 2018
  • February 2018
  • January 2018
  • December 2017
  • November 2017
  • October 2017
  • September 2017
  • August 2017
  • July 2017
  • June 2017
  • May 2017
  • April 2017
  • March 2017
  • February 2017
  • January 2017
  • December 2016
  • November 2016
  • October 2016
  • September 2016
  • August 2016
  • July 2016
  • June 2016
  • May 2016
  • April 2016
  • March 2016
  • February 2016
  • January 2016
  • December 2015
  • November 2015
  • October 2015
  • September 2015
  • August 2015
  • July 2015
  • June 2015
  • May 2015
  • April 2015
  • March 2015
  • February 2015
  • January 2015
  • December 2014
  • November 2014
  • October 2014
  • September 2014
  • August 2014
  • July 2014
  • June 2014
  • May 2014
  • April 2014
  • March 2014
  • February 2014
  • January 2014
  • December 2013
  • November 2013
  • October 2013
  • September 2013
  • August 2013
  • July 2013
  • June 2013
  • May 2013
  • April 2013
  • March 2013
  • February 2013
  • January 2013
  • December 2012
  • November 2012
  • October 2012
  • September 2012
  • August 2012
  • July 2012
  • June 2012
  • May 2012
  • April 2012
  • March 2012
  • February 2012
  • January 2012
  • December 2011
  • November 2011
  • October 2011
  • September 2011
  • August 2011
  • July 2011
  • June 2011
  • May 2011
  • April 2011
  • March 2011
  • February 2011
  • January 2011
  • December 2010
  • August 2010
  • August 2009

Categories

  • Business
  • Econ Intersect News
  • Economics
  • Finance
  • Politics
  • Uncategorized
Global Economic Intersection

After nearly 11 years of 24/7/365 operation, Global Economic Intersection co-founders Steven Hansen and John Lounsbury are retiring. The new owner, a global media company in London, is in the process of completing the set-up of Global Economic Intersection files in their system and publishing platform. The official website ownership transfer took place on 24 August.

Categories

  • Business
  • Econ Intersect News
  • Economics
  • Finance
  • Politics
  • Uncategorized

Recent Posts

  • Dogecoin Gained 50% In 3 Weeks, What Pushed It?
  • What Happens To Gold Prices As Attention Shifts To Fed Minutes?
  • UK Inflation To Reach 15% in Early 2023 – Citi Prediction

© Copyright 2021 EconIntersect - Economic news, analysis and opinion.

No Result
View All Result
  • Home
  • Contact Us
  • Bitcoin Robot
    • Bitcoin Profit
    • Bitcoin Code
    • Quantum AI
    • eKrona Cryptocurrency
    • Bitcoin Up
    • Bitcoin Prime
    • Yuan Pay Group
    • Immediate Profit
    • BitIQ
    • Bitcoin Loophole
    • Crypto Boom
    • Bitcoin Era
    • Bitcoin Treasure
    • Bitcoin Lucro
    • Bitcoin System
    • Oil Profit
    • The News Spy
    • British Bitcoin Profit
    • Bitcoin Trader
  • Bitcoin Reddit

© Copyright 2021 EconIntersect - Economic news, analysis and opinion.

en English
ar Arabicbg Bulgarianda Danishnl Dutchen Englishfi Finnishfr Frenchde Germanel Greekit Italianja Japaneselv Latvianno Norwegianpl Polishpt Portuguesero Romanianes Spanishsv Swedish