Thursday, February 04, 2010

Market Update

by Bill McBride on 2/04/2010 04:50:00 PM

Since there is some interest in the stock market, here is a different graph from Doug ...

Four Bear Recoveries Click on graph for larger image in new window.

This graph is from Doug Short of dshort.com (financial planner). His comments:

This chart is an offshoot of my Four Bad Bears. It shifts the point of alignment from the pre-bear highs to the bear bottom in the Oil Crisis and Tech Crash, the first major low in the 1929 Dow, and the March 9th closing low for our current Financial Crisis.

As the chart illustrates, the S&P 500 lows in 1974 and 2002 marked the beginnings of sustained recoveries. The Dow low in 1929 failed 11 months later.

Here is the same chart adjusted for inflation.
S&P 500 The second graph shows the S&P 500 since 1990.

The dashed line is the closing price today. The S&P 500 was first at this level in March 1998; almost 12 years ago.

The market is off 7.6% from the recent peak - still not a "correction", but we almost had our Dow 10K hats on (the Dow dipped under 10,000, but closed at 10,002)!

The S&P 500 is up 57% from the bottom in 2009 (387 points), and still off 32% from the peak (502 points below the max).