Friday, October 30, 2009

Chart of The Day: Depression Era Bear Market 1929-1932

Depression Era Bear Market 1929-1932:

For some perspective on the current stock market rally and how it compares the 1929-1932 bear market (which also included bank failures, bankruptcies, severe stock market declines, etc.), today's chart illustrates the duration (calendar days) and magnitude (percent gain) of all significant Dow rallies that occurred during the 1929-1932 bear market (solid blue dots). For example, the bear market rally that began in November 1929 lasted 155 calendar days and resulted in a gain of 48%. As today's chart illustrates, the duration and magnitude of the current Dow rally (hollow blue dot labeled you are here) is greater than any that occurred during the 1929-1932 bear market.

My comment: there is a total disconnect between the stock market and reality. House prices are plummeting and the US consumer is flat on his back. Unemployment is at 22% and banks are not borrowing money to companies and consumers. Where is the rally? Huh? Welcome to cloud cuckoo land where anything goes as long as you are well connected.

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