With the US Stock market ripping higher, it’s always fun to compare it to similar rallies throughout history. Currently, this move in the Dow Jones Industrial Average off the 2009 bottom is in fourth place when adjusted for Inflation/Deflation. The comparisons here are nicely done by Doug Short and take us back to 1896:
“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.
At this point the Dow is 974 market days beyond the 2009 low. The last time I checked, in mid-September, the index had risen to a solid third place in our Sweet Sixteen competition and was very close to overtaking the Dow rally off the 1921 low. Now, 83 sessions later, the current level is a nominal gain of 108.5% since the 2009 trough, which is a new interim high. However, since we’re comparing such a diverse set of market eras with such a wide patterns of inflation/deflation, the real numbers provide greater comparative insights.
The three rallies with higher real gains at the equivalent post-trough point were the troughs in 1932, 1982 and 1921”
What I find the most interesting about this study is that of the other 3 periods of time beating the current rally (1932, 1982 & 1921) all of them kept going much higher beyond their 1000 day mark. Something to consider I suppose before calling something “overbought”.
Make sure you go check out the full post at Advisor Perspectives
Tags: $DJIA $DIA $YM_F