Dow Jones Industrial Average Hovering Near January 2000 Peak

November 17, 2011

U.S. equities experienced an incredible bull run from mid-August 1982 to mid-January 2000, with the Dow Jones Industrial Average advancing at a 16.9% per annum pace from 777 to a peak of 11,723.  The index recorded sequential five-year averages of 3,244 in 1990-94, 7,358 in 1995-99, and 9,897 in 2000-04. 

At 11,742 at 20:00 GMT today, the DOW on balance had gone nowhere over the past 11 years and ten months, although the five-year mean of 11,052 in 2005-2009 was above its 2000-04 average.  The hallmark of U.S. equities in 2011 has been their volatility rather than their direction.  The current level is a bit over 200 points lower than this year’s average of 11,065.  It looks as though today will be 77th daily session of the year in which the market either rose or fell by at least 1.0%.  That works out to one out of every three trading days.  By comparison, the market moved at least plus-or-minus 1% on 26.2% of the days last year and 30.6% of the time in the ten years encompassing 2000-09. 

Among the 76 prior days in which the market either moved up or down by at least 1.0%, there were actually two more advances (39) than declines (37).  In contrast, more really large drops occurred than huge rallies.  On ten different days, the market fell by 3.0% or more, but it rose at least 3.0% just twice so far this year.  The biggest daily decline amounted to 5.5%, while the largest gain was marginally shy of 4.0%.

Copyright 2011, Larry Greenberg.  All rights reserved.  No secondary distribution without express permission.

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