Historical Market Rallies and Crashes Versus Today

The guys at dshort.com did a great job comparing the current market not only with The Great Depression (which is circulated everywhere) but also with other significant crashes and rallies.

It is widely known that we are seeing a similar level of recovery today as “The Great Depression Rally”.  However, it wasn’t the only notable rally we’ve encountered before.  Looking at the below chart, we can infer the following points:

1) The rate and magnitude of this year’s rally is similar to that of 1929 rally.

2) With the exception of The Great Depression, the extent of the recovery in prior markets exceeds the March ’09-August ’09 rally, but at a much slower rate.

3) Both the Oil Crisis recovery and The Great Depression recovery resulted in a significant pull back after recovering nearly 50% from the lows.

Where will the 2009 rally take us?  No one really knows but I personally don’t think this magnitude of a rally is sustainable much longer.

Historical-Market-Comparison

source: dhost.com

Here’s a look at the four historical bad bear markets.  If we see anything like The Great Depression, it won’t be pretty.

Bear-Market-Comparison

source: dhost.com

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