The U.S. Stock Market Bottomed In 2008, Not March 2009

JC Parets
March 9, 2016

Today is the 7th anniversary of the S&P500 closing low in March 2009. This date, March 9th, has gone down as the historic low in the stock market after the financial crisis of 2008. But the truth is that the market of stocks bottomed out well before that. Let's remember that the S&P500 is just 1 index with only 500 stocks. The majority of stocks had already bottomed by the time the S&P500 ultimately made its low towards the end of the 1st quarter of 2009.

Here is a chart showing the list of NYSE 52-week lows during 2008-2009. Notice how this list peaked in October 2008, 5 months prior to the S&P500 putting in its final low in March of the following year:

NYSE 52-wk lows 2009

The point of this chart is to reinforce the fact that, at the end of the day, this is a market of stocks, not a "stock market". I know it's sexy to talk about, "What did the Dow do today?", or "How did the S&P500 close yesterday?", but there's a lot more to this market than the indexes themselves. Let's remember that these indexes are manipulated with different weightings, whether market-cap weighted like the S&P500 or price-weighted like the Dow Jones Industrial Average.

The bottom for the stock market was in 2008, not 2009.

Another point that I think is worth making is that the stocks that bottomed out before the S&P500 Index, led the way higher. That relative strength showed up in 2008 and continued throughout and beyond 2009. I can give you 1000 examples, but here is one that stands out in my head. Notice how the Nasdaq100 put in its bottom in November of 2008:

qqq 2009

Here is what happened after that. The Nasdaq100 essentially doubled the performance of the S&P500 over the next 6 years.

qqq spy

I can give you a lot more examples, like Consumer Discretionaries for example, but I think you get the idea.

The U.S. Stock Market bottomed in 2008. The S&P500 bottomed in 2009. There's a difference.

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