Two Great Bounces!
The following charts provide a simple comparison between the big stock bounce that occurred in the wake of the DOW crash of 1929 and the bounce we are seeing today in the S&P 500 index.The method of alignment was simple… take the first definitive up trading day off the bottom of the preceding bear market low and set that as the start of the series… then simply re-base both series to a value of 100 so that they can be compared side-by-side.
The lower bar chart plots the cumulative percentage change since the start of each bounce.
The S&P 500 is up over 38% in just about 120 trading days… a very aggressive run with an obvious note of mania to it… and wholly comparable to yet even notably stronger than the price movement seen in the 1930s-era DOW rally.
At this point for the 30s-era DOW, the bull-run was over as the bear trend resumed in earnest… today though the Bull is on the move… how long will this boom last?
Only time will tell… But for now, let’s continue to keep a watchful eye…
Labels: put on a happy smile
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posted by SoldAtTheTop at
3:49 PM
6 Comments:
I must say comparison of Dow to S&P is totally irrelevant no matter how you cut it. Clearly the charts will never track each other no matter what. I think SATT failed to mention but S&P index is fluid which means companies are added and removed on a regular basis. A lot of times these minor details are ommited on this blog.
By
Anonymous, at 8:33 PM
The point of the post was never to show a statistical correlation.
Its simply similar periods of delusion... I dont care if there is turnover in the S&P I'm simply looking to see how far "investors" will push this rally... will it run as far as the delusional days of the 1930s?
Stock investors were way off base during the bounce of the 1930 my hunch is they are way off base today as well... only time will tell.
By
SoldAtTheTop, at 9:07 PM
"Men go mad in crowds, and come to their senses slowly..."
Doesn't matter what index you use to chart it, crowd psychology never changes.
By
Anonymous, at 10:19 PM
The dow is not immune to companies being added or removed either...but that is not the point,,,,I think it is an interesting post.
and some anon said SATT would pull it like he did twin peaks...Hey Twin Peaks served it's purpose and was "in the money" as far as I can tell..
static
By
static, at 11:29 PM
S&P turnover matters as it affects the trend that will be created in the future. Even in bear markets some companies end up doing much better than others depending on circumstances.
By
Anonymous, at 6:02 PM
Again... this is not a statistical correlation...
"investors" are treating this decline as if it were garden variety... they are anticipating recovery and trying to arbitrage the the "great" panic of 2008... but they are buying junk stocks (in small lots... less than 400 shares) ... Fannie, Freddie, Citigroup, AIG... So they are showing us their cards a bit.
This is likely a very similar scenario to the 30s... speculators coming back into the market on the heals of the crash because they effectively still believed in it... they had yet to capitulate.
Of course we now know what happened in the 30s... it was not a garden variety panic... it was a long drawn out ordeal and speculators lost their shirts.
By
SoldAtTheTop, at 6:28 PM
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