Tuesday, February 13, 2018

How Long Before Stocks Regain Previous Highs?

The question before Wall Street's punters, planners and prognosticators is measuring the length of time it will take for the main indices to regain their prior all-time-high levels.

Just in case the recent downturn isn't of the long-term variety (a 50-50 proposition), the guesses and estimates range from a few weeks to a matter of months. However, if circumstance prevail to keep stocks lower - higher interest rates, bouncy economic data, unexpected geopolitical events - regaining the high ground could take years.

A couple of recent retreats and rises may prove instructive.

After the NASDAQ shattered the 5000 mark in 2000 (5,048.62, March 10, 2000), it subsequently crashed and burned, shedding roughly 75% of its value by March 9, 2009 (1,268.64). It didn't get all the way back to the previous top until April 25, 2015, when it closed at 5,056.06.

Even more recent, when the Dow Jones Industrial Average topped out at 14,164.53 on October 9, 2007, less than 18 months later it had fallen by more than 50%, to 6,547.05, bottoming out on March 9, 2009. Fueled by central bank largesse in the form of ZIRP and QE, the Dow rocketed back to prior highs until March 5, 2013, closing at 14,253.77 that day, a period - from top to top - of a mere five-and-a-half years.

From this recent data, it appears the tops and bottoms are generally features of Spring and Fall, so the most recent January highs may not signal the market's last hurrah but portend another quick rise back beyond and then a fall.

Whatever the case may be, it does appear that the second-longest bull market in history is nearing an end, and may, in fact, be done. How long it takes to get back, after the eventual crash, is an open question, and one that should be correctly assessed in terms of years, and probably more than a decade.

For the record, the Dow regained some of what it lost over the past two weeks, but it still has a fair a distance to travel back toward the all-time highs, a touch more than 1500 points.

Next week? Why not?

Dow Jones Industrial Average February Scoreboard:

Date Close Gain/Loss Cum. G/L
2/1/18 26,186.71 +37.32 +37.32
2/2/18 25,520.96 -665.75 -628.43
2/5/18 24,345.75 -1,175.21 -1,803.64
2/6/18 24,912.77 +567.02 -1,236.62
2/7/18 24,893.35 -19.42 -1,256.04
2/8/18 23,860.46 -1,032.89 -2288.93
2/9/18 24,190.90 +330.44 -1958.49
2/12/18 24,601.27 +410.37 -1548.12

At the Close, Monday, February 12, 2018:
Dow Jones Industrial Average: 24,601.27, +410.37 (+1.70%)
NASDAQ: 6,981.96, +107.47 (+1.56%)
S&P 500: 2,656.00, +36.45 (+1.39%)
NYSE Composite: 12,560.12, +154.30 (+1.24%)

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