A comparison of 4 bear markets and where we are at today...

Discussion in 'Trading' started by Port1385, Jan 4, 2009.

  1. I found this on another site. This isnt a chart I created.

    Here are my observations:

    1) In 1974 and 2002, the bear market followed down a well defined path before there was one big fallout which marked the bottom. In the current bear market, this same fallout has come much earlier.

    2) We are right around similiar levels where there were notable turning points in past bear markets.

    3) In the 1974 and 2002 bear markets, the index revisited similiar areas (double bottom) before moving higher.

    4) The 1929 initial drop and the late 2008 drop do look very similiar.

    Im going to look for a re-test of the old lows and then for the bull market to begin. However, that last drop we had was very sharp quite similiar to the 1929 drop. Sometimes a high volume selloff does not mark a bottom, but the beginning of a long and perilous drop.

  2. 1937-1938 is the most analogous to 07-08.........
  3. Here is another statistical chart from another site. I dont know what the data points on this chart are, however.

    The dots mark the highest points of other bear market rallies.
  4. Port1385

    Interesting site.

    Thank You

  5. Better question: Where are we going ?
  6. This is another chart to make you think...it took me a few minutes to decipher it.

    It is always a safe bet to get out of the market as the 10-year annualized return approaches 14%. It is the best time to get in the market as the 10 year annualized return approaches 8.5 percent.

    We are still at around 6% which makes me think there is a little more downroom to go. The average of the 3 low appoints is around 8.763%.

    Assuming the next turning point in the S&P is 8.5%, what would be the assumed price at that turning point? I used a simple proportion and came up with a target price of 650.

    I could be wrong in doing my math. I used simple high school algebra. Please correct me if I am wrong.

    (5.96X931.8)/8.763= 633.74

    I have arrived at the mid-600s as my target price on the S&P through many other methods. For example, I used the NYSE margin debt data, a few simple trend lines on Excel and some simple proportions to arrive at that mark. I used a few simple charts to arrive at that mark as well.

    All of the data that I see shows a target of the mid-600s where I believe the bottom will be.


  7. ess1096


    Looking at the very long term chart, it is not at all out of the question that the market could drop to the trendline. So far the horizontal support has held since the mid-late 1990's. SO FAR. But if that support gives way there is a long bear ahead.

    I doubt we will see a raging bull market again for quite a while. IMO, the chart from 1995-2020 is more likely going to look like it did from 1963-1983. It will probably drift in a sideways range until it hits the trendline and resumes the long term Bull market.

  8. bear markets tend to e very brief. This one is no different.
  9. ess1096


    But rangebound markets can continue for decades. You might actually have to learn how to TRADE.
  10. This chart is something I created on OpenOffice using the publicized margin debt data. The data comes out monthly for the previous month towards the end of the current month. Therefore, this chart is somewhat delayed, but still gives you a pretty good idea.

    This chart gives us a very rough target of the S&P at 670 using simple high school algebra proportions.

    Take note, this isnt the margin data for the S&P, but the margin data for the NYA. There is a difference. In regards to the NYA, the same algebraic proportions place the target at around 4000.

    I came up with two conclusions based upon what I feel are the two logical points where the debt could fall on the chart. Either the bottom is right now or we still have some more room to go now. Either way, you can still get long now if your investment horizon is long term. However, I would wait until there is that double bottom for which I speak or a better break out on volume.

    There is a well defined trend line (which the margin debt could be at right now) or the bottom may be the old lows for the true re-test.

    My experience tells me that buying in January is foolish. Its always best to wait for August to see where you should place your money. There might be some gains now, but I think it might get taken out on the weakness in the months ahead.

    #10     Jan 4, 2009