So – just what is a bull market?

In my previous post I referred to Ned Davis Research who deems that “a  Bear Market requires a 30% drop in the Dow Jones Industrial Average after 50 calendar days or a 13% decline after 145 calendar days.” Also according to Ned Davis Research during a study period from January 2, 1900 through December 31, 2010, (over 100 years) big corrections in the Dow Jones Industrial Average are actually quite rare.

Dips of 5 % or more totalled 378 or 3.4 per year

Corrections of 10 % or more was 122 or about 1 per year

Bear declines of 20 % or more was 32 or about I every 3.5 years

The business media claim that a decline of 20% puts the market into “bear territory.”

At Getting Technical our historical market studies dictate that bear market prints a lower low within a rolling 26 to 30 week time window. In other words – in order to be a bear, a broad stock index like the S&p500 must print a lower low within a rolling six month window – if not – then it is a bull. The S&P500 from late 2012 through June 2016 charted bear is based on a simple 26 week price channel and note the 2 downward violations of Aug 22, 2015 and finally on Jan 22, 2016 – we are now past the 6-month window and so if not a bear then it’s a bull.. 

So – just what is a bear market?

Ned Davis Research deems that “a  Bear Market requires a 30% drop in the Dow Jones Industrial Average after 50 calendar days or a 13% decline after 145 calendar days.”

Also according to Ned Davis Research during a study period from January 2, 1900 through December 31, 2010, (over 100 years) big corrections in the Dow Jones Industrial Average are actually quite rare.

Dips of 5 % or more totalled 378 or 3.4 per year

Corrections of 10 % or more was 122 or about 1 per year

Bear declines of 20 % or more was 32 or about I every 3.5 years

The business media claim that a decline of 20% puts the market into “bear territory.”

At Getting Technical our historical market studies dictate that bear market prints a lower low within a rolling 26 to 30 week time window. In other words – in order to be a bear, a broad stock index like the TSX Composite must print a lower low within a rolling six month window – if not – then it is a bull.

The TSX late 2014 through 2015 charted bear is based on a simple 26 week price channel

The DJII - America Yesterday and Today:

The changing components of the Dow Jones Industrial Average (DJII) reflect the gradual transition of America yesterday to America today. Years ago – back in the 1980’s investors enjoyed the returns of the Dow Jones Industrial Average which ran from about 800 to over 3000 in ten years – a triple.

Back then the Dow was truly “industrial” with eighteen industrial relater components. There were only six consumer related components with the rest being energy, financial and IBM or “big blue”. Those were the days when the Dow components employed people who made stuff - Allied Chemical, Aluminum Company of America, American Can, Bethlehem Steel, Du Pont, Eastman Kodak Company, General Electric Company, General Motors Corporation and Goodyear – just to name a few of the employers.

Today the Dow is no longer “industrial: with only six industrial manes and twelve consumer names. So instead of working at Goodyear and Union Carbide the jobs go to McDonald's Corp and Wal-Mart Stores Inc.

Yes today’s Dow is populated by companies that sell stuff to Americans that was made somewhere else. We can go to Dow components Wal-Mart, grab a Coke and burger at McDonalds, pick up a Disney movie, get a cell phone plan from Verizon Communications Inc. and use our Visa Inc. credit card. We could also run our American Express Company card at The Home Depot, Inc to cover the purchase of Asian flooring. And yes you could look for shoes from Nike, Inc while you’re out there.