The Big Picture

Home

Articles - Technical Analysis

The Big Picture

Glenn Kuppe examines the history of secular bear markets.

Then Charles Dow was inspired to publish his stock index on the pages of the Wall Street Journal in the 1890s, the world was mired in depression, banking collapses and a bear market in stocks. First published at 40.94 on 26 May 1896, the index quickly fell to its lowest-ever point at 28.48 on 8 Aug 1896 before a bull market stampeded into the early 1900s. Although the bull stumbled from 1901 to 1903, the total advance was greater than 300 per cent and a high of 103.00 was finally achieved in January 1906.

The Dow Jones went sideways throughout 1906 before the onset of panic saw the index fall by almost half, to 53.00 into November 1907. US government people approached JP Morgan and famously implored him to support the market by covering short positions and buying stocks. He did so, in return for being allowed to have control of US Steel. This marked the beginning of the first secular bear market of the twentieth century. The US stock market, as measured by the Dow Jones Industrial Average, did not make a substantial new high until after a final higher low in 1924 – eighteen years after the initial high in 1906 (figure 1). During this period, any break to a new high was short-lived, with the market quickly giving back any gain.

The roaring twenties witnessed a huge bull market as new technology and public participation in stock market investments drove the Dow to unprecedented heights. As we know, after leading the index to a high of 386.1 in September 1929, the speculative boom soon gave way to a crash that crippled global markets and economies for many years to come...

Excerpted from an article originally published in the Jan/Feb 2012 issue of YourTradingEdge magazine. All rights reserved. © Copyright 2012, Your Media Edge Pty Ltd.
If you are a subscriber to YourTradingEdge magazine, you will receive this article in your Jan/Feb 2012 issue of YTE. If you are not a subscriber, click here to subscribe to our print edition, or to purchase a digital subscription, click here.

» Diary of a Currency Trader

Due to recent market volatility, currency trading is experiencing a popularity boom; Rob Colville shares his most recent trade examples.Fast, furious, volatile conditions have recently created abundant opportunity in the world’s currency markets. This is particularly true for the thin band of...

» Profiting from Peak Oil

Ben Mountifield explores what peak oil means for society at large and the opportunities it creates for traders.Oil is a finite, non-renewable resource. Since its discovery in 1859, oil production (meaning the extraction and refining of oil) has increased almost every year. At some point, however,...

» Secrets from the tomb

David Burton explores the trading methodology of WD Gann.On 10 September 2011 (9/10/11) I arrived in New York with two astrologers, Elena and Fran, who had both completed my ‘Mastering Markets’ workshop. Elena and I were leaving New York on 13 September on a cruise, but I wanted to visit...

» Malcolm Pryor

YTE’s Ben Power speaks to technical analyst and educator Malcolm Pryor – who talks CFDs, spread betting, trading strategies, and what it takes to make a successful trader.In recent years, many traders have turned to over-the-counter products such as CFDs, and, in the United Kingdom, spread...

» Market Snapshot - Jan/Feb2012

Lachlan McPherson provides up-to-date market analysis: 2011 – a year the airlines would rather forget.The year 2011 was a year most international airlines would rather forget. In fact, for most companies listed on any global exchange, 2011 was hardly a year for the record books. Cyclical in...

» Feeling like a GFC victim?

Take action and take control, says Louise Bedford.I've always felt I would die young. I'm not sure where that thought came from, but, weirdly, it has served me well. I've done everything to cram as much 'living' into my life as I can, just in case the next breath is my last.There are so many...