Who's afraid of the big, bad bear?

A

ASusilovic

Since the Dow Jones Industrial Average was created in 1896, there have been 33 bear markets -- defined as declines of 20% or more from a previous high point, which may or may not be a "high-water" mark.

As of Friday's close, the Dow is down 14% from its high of 14,164.53 on Oct. 9.

This decline could turn out to be another correction, and before long the bull market will stagger to its feet for another sprint.
However, other history argues against that scenario. The five-year bull market that was either interrupted or ran out of steam on Oct. 9 lasted eight months longer than the post-war average. The bull appears at first glance to be significantly below average in strength, gaining 94.4% versus an average post-war bull run of 136%.
But if we remove the three giant bull markets of 1949-61 (up 354.8%), 1982-87 (a 250.4% gain) and 1990-2000 (395.7% higher) from the average, we get 61.8%. That would make the most recent bull more than 32 percentage points larger.

If you ask me, the bear is about due.

http://www.marketwatch.com/news/sto...x?guid={7A2BA133-D225-4203-8AB3-72DD0B72BAD5}

1) Does that mean we have at least 6 % to go in this "bear market" ?

2) What´s the probability it´s going to be much worse - let´s say - 40 % ?


:)
 
Quote from ASusilovic:



As of Friday's close, the Dow is down 14% from its high of 14,164.53 on Oct. 9.


1) Does that mean we have at least 6 % to go in this "bear market" ?
More...



If it's a 20% retracement in the DOW you are looking for, that already happened last month.
 
I believe the bear is alive and well. The following are my observations that I put forward last night in another thread:


Quote from Cherrypicker:

Before I get started, this thread is based on the Aussie market. It may however, interest a few traders in the US. My reasoning is that when the US markets catch a cold, we in Oz tend to get snotted to a similar extent. I simply trade what I see, based on weekly chart setups, then waiting for confirmation on daily charts, and scaling down in time frames.
I've just spent my usual Sunday evening going through the ASX100 looking for weekly setups and 33 of the 100 top stocks in the country have shown me either one of my favourite two setups for a 'potential' drop (I usually get 5 or 6). The company's range across all fields including oil, finance, medical, IT, childcare, you name it. Should I get daily confirmation in the coming days or weeks, I'll be throwing everything at it. Before I get my throat slit and told I'm a moron, blah, blah, blah......I'm neither a permabull nor a permabear. I trade what I see. The implications of this for my fellow US traders..... in my relatively short trading career any 'really big' swings I've experienced have usually coincided with those experienced on the DOW in the days immediately before or after.

Having said that, I am awaiting confirmation for entry on all, bar 2 or 3. I may not get it. For the sake of long term investors I hope I don't.

Knock your socks off.
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Suss------
1) Holy caca! 61.8% is a fibonacci ratio!
2) Depending on which numbers you use for the high and low of the Dow Jones, the retracement off of the all-time high is ~19%.
3) Given the "bad" fundamentals that exist, re-testing the previous lows to create a 20% or larger retracement doesn't seem too improbable.
4) Given (3) and the excessive optimism that exists towards believing the worst is over and the Fed is "in charge" means that a 40% drop seems quite reasonable, no different than 2002.
5) A 20% retracement is an arbitrary number to define a bear market. Bear markets are better-defined by tracing out lower highs and lower lows.
 
Quote from nazzdack:

Suss------
1) Holy caca! 61.8% is a fibonacci ratio!
2) Depending on which numbers you use for the high and low of the Dow Jones, the retracement off of the all-time high is ~19%.
3) Given the "bad" fundamentals that exist, re-testing the previous lows to create a 20% or larger retracement doesn't seem too improbable.
4) Given (3) and the excessive optimism that exists towards believing the worst is over and the Fed is "in charge" means that a 40% drop seems quite reasonable, no different than 2002.
5) A 20% retracement is an arbitrary number to define a bear market. Bear markets are better-defined by tracing out lower highs and lower lows.
More...

Nazz,

priceless ! :D
 
Dow is irrelevant nowadays, it's the S&P that is the benchmark. And the S&P was down 20% as of 2 1/2 weeks ago. In other words, we already had a bear market, and we've recently had a panic bottom too, which often marks the lows of a bear.

The only question is have we already made the bottom, or are we going to see further falls to either a double bottom, or significant new lows.
 
Quote from Cutten:

Dow is irrelevant nowadays, it's the S&P that is the benchmark. And the S&P was down 20% as of 2 1/2 weeks ago. In other words, we already had a bear market, and we've recently had a panic bottom too, which often marks the lows of a bear.

The only question is have we already made the bottom, or are we going to see further falls to either a double bottom, or significant new lows.
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question - the nasdaq hit 20% then went back up, does this count as a bear market? or since it didn't stay under 20% it doesn't count as a bear market? :confused:
 
Quote from Cutten:
The only question is have we already made the bottom, or are we going to see further falls to either a double bottom, or significant new lows. [/B]
More...

Seems to me that recession is priced into property financials and consumer cyclical stuff such as retailers or Harley Davidson but not into the broader market which continued to go up as the homebuilders etc fell. I don't believe that the homebuilders are going to make a meaningful non short covering rally for 2 years, and could even fall further. So with those stocks staying in a sideways motion, what is to come is the downmoves in the rest of the market and thus the index as the reverse multipler effect from housing declines feeds through to earnings across the economy. Slow bleed.

We are still at the stage where there is uncertainty/propagandist denial. We have not even reached the stage where denying there is a recession destroys credibility. When there is talk of a V or U shaped recovery it means everyone is affected in some way and even then it may have another 1-2 years to run. The last time the Fed cut like this was in 1990. How long did the recession of the early '90's last? In 2000 the view that Greenseniles cuts had saved the market persisted long enough to get a book out. It was called 'Maestro' believe it or not, depicting Greensenile as the genius who had prevented recession with interest rate cuts.
 
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