May 14, 2008
Although the averages advanced more than one percent during the day, they failed to maintain their gains at the close. While the DJIA finished up .52 percent, and the S&P500 held on to .40 percent, the NASDAQ change barely stayed in the positive, up just .06 percent at the close.
Even though the daily advances are far from large, and while they are intermixed with frequent correction, the indices have risen substantially since their most recent low on March 10.
The NASDAQ close today is 15 percent above that bottom, achieving this increase in just 46 trading days. Similarly, the S&P500 has gained 10.6 percent and the DJIA moved up 9.9 percent in that period.
Its quite easy, with these sharp gains, to postulate or is it, hope- that the decline has corrected itself, and stock prices will continue to move higher, despite much negative economic news. That now, just 150 trading days after prices peaked last October, the market is in for some robust growth.
But a look at the last major decline, the 2000/2002 experience, reveals that it took 741 trading days for the recovery from that trough. It also exposes that the upturn was not at all smooth, nor even continuous. For example, the market required 259 trading days to return to its earlier peak, only to drop three more times, over the next year and a half, before the trend turned positive and growth became the major trend.
DJIA .52 percent
NASDAQ .06 percent
S&P500 .40 percent