February 24, 2009
Prices finally moved higher, and with a big bang, scoring the best advance since January 21, some 23 trading days ago. That earlier close also came after sharp declines on the day before; yet todays recovery outdid January ‘sadvance. Then, even though prices rose more than four percent, the previous days losses were even larger. By contrast, todays gains exceed yesterdays retreat, except for the DJIA, which missed the break-even point by just .09 percent.
Lets turn to compare the current slump with the 1929 crash using the graph below. It shows each days DJIA closing price as a proportion of its peak price, on September 3, 1929 and on October 7, 2007.
First, prices fell more drastically, and recovered more, at the beginning of the decline, in 1929 than in 2007. Then, though it appears that the current downturn is catching up, todays price is 52 percent of its 2007 top, while at the same stage, in the earlier cycle, prices were only 44 percent of the 1929 high.
The current decline, now in its 344th day, is at the point where, in 1929, the drop still had a further 370 trading days to go before reaching its lowest point. That is, in terms of 1929, todays market is less than halfway -48 percent- through the earlier crash’s life.
DJIA 3.32 percent
NASDAQ 3.90 percent
S&P500 4.01 percent