February 26, 2009
Prices fell for the second day in a row, closing just about the same level as three days ago, on Monday. So the topsy-turvy market, one step up and several steps down continues.
At this stage the current decline, which started in October 2007, is substantially below the previous bear market that topped out on March 23, 2003. The diagram below shows these two cycles, with the current downturns top positioned at the peak of the earlier
Our present position is substantially below the 2003 cycle, and yet the downturn today is 348 trading days old. Considering that the earlier cycle took 742 days from peak to trough, it is not difficult to assume that at this point, we are only halfway through the correction.
The action may change; prices might return to their October 2007 level much sooner, and this projection scenario will turn out to be false and too negative. Nevertheless, such simulations provide meaningful yardsticks, as we need, and try, to come to grips with a significant downturn, and when and where it will end.
DJIA -1.22 percent
NASDAQ -2.38 percent
S&P500 -1.58 percent