I think it’s important every now and then to take a step back and really compare today’s market environment to similar circumstances throughout history. It helps to gain some perspective on where we are and where we’ve been. And maybe, some of that information can shed some light on where we’re going.
Today’s Chart of the Day plots every Dow rally in terms of both magnitude and duration. Rallies in the Dow Jones Industrial Average, according to this chart, represent any advance that came after a 30% decline. There have been 13 such instances since 1900, which on average is one every 8.5 years or so.
Here is the chart showing how our current stock market rally (off the March 2009 lows) is below average in both magnitude and duration:
The good folks at Chart of the Day also note that when you compare the current advance to the most recent post-major bear market rally (i.e. the rally that began in 2002), this bull market is significantly greater in magnitude but also accomplished this feat in less time. I thought that was interesting. But if you go back further in history, this “huge rally” is really nothing special. At least not yet…
Tags: $DJIA $DIA $YM_F $DJI