Chart of the Day: Stock market rally long in the tooth
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November 2nd, 2009 by Prieur du Plessis, Investment Postcards from Cape Town
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How does the stock market rally since the March 9 low compare with the 1929-1932 bear market - which also included bank failures, bankruptcies, severe stock market declines, etc.?
For some perspective, Chart of the Day provided the graph below, illustrating the duration (calendar days) and magnitude (percentage gain) of all significant Dow Jones Industrial Index rallies during the 1929-1932 bear market (solid blue dots).
As the chart shows, the duration and magnitude of the March 2009 rally of the Dow (hollow blue dot labeled “you are here”) are longer than any that occurred during the 1929-1932 bear market. Add an ugly technical picture and stretched valuations, and it is not difficult to conclude that it is prudent to be on the sidelines at the moment.
Source: Chart of the Day, October 30, 2009.
Dr. Prieur du Plessis is an investment professional with 26 years' experience in investment research and portfolio management. More than 1,200 of his articles on investment-related topics have been published in various regular newspaper, journal and Internet columns, including his blog, Investment Postcards from Cape Town. He has also published a book, Financial Basics: Investment. Prieur is Chairman and principal shareholder of South African-based Plexus Asset Management, which he founded in 1995. The group conducts investment management, investment consulting, private equity and real estate activities in South Africa and a number of foreign countries. He also serves as Honorary Consul of Slovenia for South Africa, actively developing economic, cultural and scientific relations between Slovenia and South Africa. Prieur is 54 years old and live with his wife, television producer and presenter Isabel Verwey, and two children in Cape Town, South Africa. His leisure activities include long-distance running, traveling, reading, motor-cycling and scripophily. Read more from the author/contributor here.
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