December 11, 2008
After posting gains, the market faltered, closing lower, and ended just below last Fridays levels. Prices continue their up-then-down pattern and so far, fail to maintain an upward momentum. While prices have recovered from their recent lows on November 20, they have not yet given a clear signal that the long awaited surge has started.
Yet, in contrast to the last bear market, in 2001-2002, which lasted 421 trading days before recovering, the current decline is just 283 days past its October 9, 2007 top. While this comparison implies that more time must pass before the next upsurge begins, the comparison of price erosion yields a different perspective.
In the last bear market, the S&P500 lost 43 percent, as it fell 596 points between February 2001 and October 2002; the current decline, as of the latest low on November 20, is 812 points, or 52 percent.
Clearly, from the viewpoint of price erosion, this market has surpassed the 2001 correction, and reached this low in far less time.
DJIA -2.24 percent
NASDAQ -3.68 percent
S&P500 -2.85 percent