Has the Stock Rally Peaked?

by Ian Mathias.

This time last week, we began with a typical bar stool question: Where’s the market headed? Since stocks have been intent on going nowhere (the S&P has piddled forward to a 0.5% gain so far this week), we’ll turn that query on its head today:

Where’s the market been?

The answer is that the market’s caught up in one of the biggest bear market rallies in American history. See for yourself:

[_EMBED1]

The current bear market rally is longer in duration than any Depression-era rebound, and is second only in magnitude to the initial crash snapback in 1929.

Bill Bonner suggested yesterday that we are “at the beginning of a long period of adjustment — a depression.” Hmmm… And the current stock rebound looks a lot like the rally of 1929, during the very early stages of the Great Depression. So if history is to repeat, that would put us:

[_EMBED2]

Ian Mathias is the managing editor of Agora Financial's Income Franchise, where he writes and researches about retirement, dividend and fixed income investing. Much of his work is featured in The Daily Reckoning and Lifetime Income Report, Agora Financial's flagship income investing advisory.  

Previously, Ian managed The 5 Min. Forecast, a fun, fast-paced daily look into the future of global markets and macroeconomics. He's also worked in public relations, where media outlets like Forbes, AP, Yahoo! and MSN Money have syndicated his writing. If he's not at work, you'll probably find Ian on a bicycle, racing up and down the "mountains" of Baltimore County. Ian has a BA from Loyola University in Maryland. 

  • tony bonn

    don’t count out that crazy fed “stimulus”, bailout, and backstop money making its way into the stock market….this levitation / bear rally could go on for quite some time…

  • Wade Buchanan

    My target for the peak of this rebound was about 9940 on the DOW, but I read another piece that was well written that stated they thought 10,300 on the DOW was the peak before the correction. Regardless I think there is a little more leg room to run before this runs out of “enthusiasm”. I was premature jumping into short positions and have been taking a beating, but have some powder dry to add to my positions as this gets a little closer to my targets.

    I agree with the other poster regarding the stimulus and bailouts being an unknown factor. However I would like to add that it looks like China and others who have been buyers of our debt are pushing away from the table and the Fed is having to indirectly bid up treasuries at the auctions so it would appear that the music could stop sooner than we think if this information becomes public via the Bloomberg lawsuit or via the actions to Audit the Fed.

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