Big Stock Market Rallies in a Bear Market
March 10, 2009
At mid-day in New York, the Dow Jones Industrial Average shows a gain of 5% since the open. We are possibly on our way to the tenth daily increase of at least 4% since a record closing high of 14165 in October 2007. Daily moves of as much as 4% are usually very uncommon. There were just twelve of them from the beginning of 1990 until the October 2007 peak, a period during which the market rose 414.5% on net, or 9.7% per annum. By contrast, the market has tumbled at a 42.5% annualized pace since its record high in spite of those nine terrific days when the market spiked at least 4% each. The lesson is to beware of extraordinary rallies imbedded within bear markets. Counter-intuitively, such blowouts tend to be a sign of unhealthy markets.
Copyright 2009 Larry Greenberg. All rights reserved. No secondary transmission without express permission.
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