The chart above identifies five major trends which have occurred over the last 80years. First is the 1929-1932 Bear Market, which, although it was short, saw the market decline 90%. Next was a bull market which lasted from 1932 to 1966, which overlaps with the consolidation of the 1960s an 1970s. In the early 1980s another bull market began which peaked in 2000. Finally, we seem to have entered another consolidation phase...it could finish tomorrow, or it could last another 10 years.
Since last week the stock market has made a little progress toward putting in a bottom. Unfortunately, volume associated with this move has been tepid, and there has not been any follow through. This may indicate the advance was primarily being driven by short covering, and that investors are still fearful and on the sidelines. Maybe a bottom is forming, but it is difficult to assert that with much confidence.
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