August 31, 2012 Now and Then: The Current Cycle and the 2003/2007 Bull Market
Today’s session was the 879th trading day since the market touched the latest bottom in March 2009.
Prices so far have recovered substantially, with the NASDAQ now at 109.4 percent of its October 2007 high. The DJIA and the S&P500 have not done as well, returning only to 92 percent of their last top.
At this stage during the last, 2000/2003 bear market, the NASDAQ stood at just 44 percent of its 2000 peak, while the DJIA reached 103 percent of its previous high. The S&P500 had recovered 86 percent.
Today’s diagram, showing the closing prices of the S&P500 during the 2003/2007 recovery in black, with the current cycle in blue.
With the previous rebound lasting 1,154 trading days, prices will continue their advance if this cycle duplicates the last one, since currently we have completed only about 75 percent of that earlier tenure.
The number of direction changes is roughly equivalent for these two cycles, with the earlier one’s closes moving higher or lower 54 percent of the time. The current cycle, so far, has 50 percent.
Yet the current average daily changes exceed the earlier cycles by about 50 percent. The DJIA’s current daily change averages about .09 percent, whereas this number was only .06 percent between 2003 and 2007.
