Comments on: Comparing Market Breadth To 2003’s Bull Market http://www.tradersnarrative.com/comparing-market-breadth-to-2003s-bull-market-2692.html Freshly squeezed market commentary & analysis Sun, 21 Mar 2010 14:14:36 +0000 http://wordpress.org/?v=2.0.2 by: Zee Man http://www.tradersnarrative.com/comparing-market-breadth-to-2003s-bull-market-2692.html#comment-59157 Sun, 20 Dec 2009 10:03:13 +0000 http://www.tradersnarrative.com/comparing-market-breadth-to-2003s-bull-market-2692.html#comment-59157 Compared to 2003 I'd agree. But it takes a lot farther lookback to arrive at a period that is comparable. I did a count of how many market days were spent with the percentage of components in the NYSE below the 150 moving average on the final bottom looking back three years. At the bottom this time (March 9, 2009) that comes out at 87. You have to go back to 10/3/1974 to find one close -- at 77. If you go back to 3/31/1938 you find one that exceeds it at 131. And on 6/1/1932 you find one that reaches 261. So the #s during the great depression and immediately after were much worse. BTW -- at the bottom in 2003 there are just TWO cases when the NYSE had a percentage below 10%. But how long did it take to reach 90% from these past cases -- cases that are much more comparable to this one. 6/1/1932 bottom: hits 90% on 8/22/1932 just 2.7 months later 3/31/1938 bottom: hits 90% on 7/1/1938 just 3.06 months later 10/3/1974 bottom: hits 90% on 2/21/1975 4.7 months later 3/9/2009 bottom: hits 90% on 8/13/2009 5.23 months later So it is true that all of the historical cases took less time to reach 90% than this time. Compared to 2003 I’d agree. But it takes a lot farther lookback to arrive at a period that is comparable. I did a count of how many market days were spent with the percentage of components in the NYSE below the 150 moving average on the final bottom looking back three years. At the bottom this time (March 9, 2009) that comes out at 87. You have to go back to 10/3/1974 to find one close — at 77. If you go back to 3/31/1938 you find one that exceeds it at 131. And on 6/1/1932 you find one that reaches 261. So the #s during the great depression and immediately after were much worse.

BTW — at the bottom in 2003 there are just TWO cases when the NYSE had a percentage below 10%.

But how long did it take to reach 90% from these past cases — cases that are much more comparable to this one.

6/1/1932 bottom: hits 90% on 8/22/1932 just 2.7 months later
3/31/1938 bottom: hits 90% on 7/1/1938 just 3.06 months later
10/3/1974 bottom: hits 90% on 2/21/1975 4.7 months later
3/9/2009 bottom: hits 90% on 8/13/2009 5.23 months later

So it is true that all of the historical cases took less time to reach 90% than this time.

]]> by: Babak http://www.tradersnarrative.com/comparing-market-breadth-to-2003s-bull-market-2692.html#comment-59001 Fri, 18 Dec 2009 17:04:40 +0000 http://www.tradersnarrative.com/comparing-market-breadth-to-2003s-bull-market-2692.html#comment-59001 Zee Man, except that during the 2007-2009 bear market from October 2008 to April 2009 the percentage of stocks above their 150 moving average remained very low (below 10%!!). That is a very long time to remain 'oversold'. This would allow the 150 moving average for stocks to catch up to current prices and therefore, make it easier to climb above it. Compare this to the short time that it spent below 10% in 2002. Zee Man, except that during the 2007-2009 bear market from October 2008 to April 2009 the percentage of stocks above their 150 moving average remained very low (below 10%!!). That is a very long time to remain ‘oversold’. This would allow the 150 moving average for stocks to catch up to current prices and therefore, make it easier to climb above it. Compare this to the short time that it spent below 10% in 2002.

]]> by: Zee Man http://www.tradersnarrative.com/comparing-market-breadth-to-2003s-bull-market-2692.html#comment-58985 Fri, 18 Dec 2009 10:11:07 +0000 http://www.tradersnarrative.com/comparing-market-breadth-to-2003s-bull-market-2692.html#comment-58985 You wrote: "So what this analysis tells us is that the recent rally was one where a small subset of the S&P 500 rallied, pushing the averages higher." Actually, I believe it is more a reflection of the degree to which the components of every exchange and every index (the S&P 500 included) fell in the 2007-2009 bear market compared to the 2000-2002 bear market. The latter was primarily a bear market in tech stocks. While it was going on there was actually a bull market in quite a few sectors. From 3/24/2000 to 3/17/2003 79% of the 49 industries tracked by Fama French had a positive return. In contrast to tech, industries like Personal Services experienced an equal weighted gain of 264%, while Precious Metals had a gain of 192%. Over 90% of the S&P 500 components were above their 150 day moving average by 6/2/2003 from the low of 3/17/2003. But if you consider the 10/9/2002 low as the actual bottom, the distance to June 2nd is much longer. This time the S&P 500 had more than 90% of its components above their 150 day moving average on 7/24/2009.... about 4.5 months out from the low of 3/9/2009. So I would venture to say it was not a small subset of the S&P 500 that has participated this time around... but rather, the fact that so many of them had fallen so far it took a bit longer to get them back above their 150 day moving average. You wrote: “So what this analysis tells us is that the recent rally was one where a small subset of the S&P 500 rallied, pushing the averages higher.”

Actually, I believe it is more a reflection of the degree to which the components of every exchange and every index (the S&P 500 included) fell in the 2007-2009 bear market compared to the 2000-2002 bear market. The latter was primarily a bear market in tech stocks. While it was going on there was actually a bull market in quite a few sectors. From 3/24/2000 to 3/17/2003 79% of the 49 industries tracked by Fama French had a positive return. In contrast to tech, industries like Personal Services experienced an equal weighted gain of 264%, while Precious Metals had a gain of 192%.

Over 90% of the S&P 500 components were above their 150 day moving average by 6/2/2003 from the low of 3/17/2003. But if you consider the 10/9/2002 low as the actual bottom, the distance to June 2nd is much longer. This time the S&P 500 had more than 90% of its components above their 150 day moving average on 7/24/2009…. about 4.5 months out from the low of 3/9/2009.

So I would venture to say it was not a small subset of the S&P 500 that has participated this time around… but rather, the fact that so many of them had fallen so far it took a bit longer to get them back above their 150 day moving average.

]]> by: Babak http://www.tradersnarrative.com/comparing-market-breadth-to-2003s-bull-market-2692.html#comment-44354 Thu, 25 Jun 2009 02:06:32 +0000 http://www.tradersnarrative.com/comparing-market-breadth-to-2003s-bull-market-2692.html#comment-44354 bob, are you referring to the <a href="http://www.tradersnarrative.com/comparing-flag-formations-then-now-2627.html" rel="nofollow">flag formation in the summer</a>? The consolidation period started in late June 2003, by which time the breadth measure (mentioned above) already hit 90%+ bob, are you referring to the flag formation in the summer? The consolidation period started in late June 2003, by which time the breadth measure (mentioned above) already hit 90%+

]]> by: bob j http://www.tradersnarrative.com/comparing-market-breadth-to-2003s-bull-market-2692.html#comment-44091 Wed, 24 Jun 2009 15:06:51 +0000 http://www.tradersnarrative.com/comparing-market-breadth-to-2003s-bull-market-2692.html#comment-44091 the 2003 market finished an extensive consolidation period whereas the 2009 market has not consolidated which iIbelieves expalins the breadth discrepancies . the 2003 market finished an extensive consolidation period whereas the 2009 market has not consolidated which iIbelieves expalins the breadth discrepancies .

]]>