100 Days from Major Troughs

The Big Picture picked up an interesting article from Credit Suisse Fixed Income Group, which noted the diversity of performance around the first 100 days of major market lows in US equities.

The first of these shows the past episodes that might turn out to be the most relevant. Note that one of these is the post 1929 crash bear market rally – it just happened to be 46% or so over five months. Which is actually typical of the first year of major bull markets.

The second shows some less exciting episodes that were nonetheless significant market bottoms rather than mere staging posts towards significant new lows.

Chart 1: S&P500- 100 Days from Major Troughs

I hope that this will shed some light on what to expect from the US markets for the next few weeks or months. Since we are about 18 days from the bottom made on March 8th, the US markets could be due for some correction. Do bearing in mind that the above chart- since the Credit Suisse article is a few days old- has only tracked the current rebound for 13 days from the market bottom (or, up to March 25th).

Looking at the daily chart for DJIA and armed with the above historical data, I believe that the current rise in DJIA will meet with strong resistance at the 8000 point level.


Chart 2: DJIA's daily chart as at 1/4/2009 (Source: Stockcharts.com)

via The Big Picture