click for ginormous chart
bull market corrections
Source: Investech



We are almost through September and despite its reputation for volatility, the month has seen strong upside and new bull market highs.

The S&P500 lost “only” 4.6% in August, but based on the Sturm und Drang you are forgiven for assuming it was 3X that amount.

As the chart above shows, there have been lots of 5%+ retrenchments since the market lows of 2009. Its worth noting that the corrections since 2011 have gotten shallower.

Here is Jim Stack:

“Historically, the average time between market corrections is 7.6 months. However, as shown in the graph [above], there were five corrections in just the first year of this bull market. After the initial 12 months, corrections slowed and followed a more typical pattern, occurring once or twice a year. Altogether, there have been 11 corrections of 5% or more, with two of those logging greater than 10% declines.

How does this compare to other extended bull markets? At 4.5 years, this bull market is already one of the longest since the Great Depression. Looking at the S&P 500 back to 1932, the average bull market duration is 3.8 years and, in comparison, this one is getting a little long in the tooth. Still, it does have a few peers… of the 16 bull markets over the past eight decades, only five prior to this one lasted more than 4.5 years.”

Good stuff. Stack is one of my favorite off Wall Street strategists, and I always appreciate his cool, data driven analyses.


Category: Cycles, Markets, Technical Analysis

Please use the comments to demonstrate your own ignorance, unfamiliarity with empirical data and lack of respect for scientific knowledge. Be sure to create straw men and argue against things I have neither said nor implied. If you could repeat previously discredited memes or steer the conversation into irrelevant, off topic discussions, it would be appreciated. Lastly, kindly forgo all civility in your discourse . . . you are, after all, anonymous.

10 Responses to “Bull Market Corrections, 2009-2013”

  1. Frilton Miedman says:

    If you buy the “You can’t fight the Fed” mantra, then stating this bull is long in the tooth is oversimplification, IMO, without acknowledging the goals of Fed policy.

    It would seem like a better way to gauge when the market has topped is once U/E is at 6.5% and/or there are substantial wage improvements.

    What’s prolonging Fed engagement is the constant creation of one crisis after another by the GOP’s Tea Party, 2011 was a major economic setback and now we have more to come.

    The Fed is like a maid, following spoiled rich kids around with a vacuum cleaner, barely keeping up with them, while the Fed is pushing on a string, the Tea Party is on the other end of the string pushing back.

  2. Chief Tomahawk says:

    It would probably be an appropriate reminder to post, with this chart data, the correlation between FED moves and the market indices, since it’s 85%+ or whatever.

  3. SaraGlakas says:

    I’m sure I’m not the only money manager who has Jeremy Grantham’s “Investing While Terrified” running on a continuous loop in the back of my mind. For me, the moral of this story is to trust in asset allocation, hang on to your hat, and don’t throw entire asset classes (including stocks) in the garbage, even when terrified. I’m going to call the Investech folks to see if they’ll give me permission to show this chart in an investing class I’m teaching next month. Thanks for sharing, Barry.

  4. Backcreek says:

    It is interesting to compare this chart to Hussman’s here:

  5. Angryman1 says:

    Man, the private sector is really recovering. My guess debt servicing is dropping below debt production in full since the Q2. I could see a U-3 rate of below 6% when not including the public sector. That is pretty close to a full recovery.

    This is something everybody on this board needs to understand about equity markets. They don’t measure public sector indicators, they measure private sector indicators. To them, the private sector is doing well and that is all that matters.

  6. AtlasRocked says:

    Here’s a great chart on corrections, too:

  7. PeterR says:

    The 2009-2013 move up sure looks a lot like the move off the 1982 bottom IMO.

    Santa Rally has already started?

    [charts at link above]

  8. bartolomo says:

    Not to split hairs (except that’s exactly what I’m doing)–if one were to use the intraday high on 5/2/11 and the intraday low on 10/4/11, the *correction* is 21.6% making it, (ahem) a 5 month bear with a new bull now less than 2 years old.

    Anyway, love your stuff Barry.

  9. LeftCoastIndependent says:

    Ahhhh yes, life is so much better when 12 people centrally control a multi trillion dollar economy. Maybe those commies had it right after all ? NOT ! Ronald Reagan must be trying to kick the lid off that coffin.