For the United States; Here is my take:
By Daniel at 22 December, 2009, 5:12 pm
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Look at the SPY which is the ETF for the broad index SnP500.
2008 was the year the battle has been fought the hardest. The bears won but so were the buyers at the bottom. November was an all-time high in terms of volume traded. That was where the big players bought whatever they can when the general public was in a panic state. After the panic of Nov 2008; the capitulation happened in March 2009 as attested by the volume spike but of lesser amount than that of Nov 2008.
On the yearly chart. 2009 rally performance is similar but a lot better than the preceding rally before the meltdown which was 2003 after the tech wreck of 2000 to 2002. Volume in 2009 far exceeded that of 2003 rally.
A very encouraging indicator. Big investors bought a lot more in 2009 than they did in 2003 after the dot.com bust.
But of course we ended up with a flat-liner decade after 2 decades of rally from the early 1980 to 2000.
Previous to that was more than 3 decades of rally off the 1932 bottom and into 1965 where Dow Jones seemed unable to break the $1000 ceiling. That 3+ decades of rally was blunted by 1-1/2 decades of consolidation ranges. A lost 1-1/2 decade at that time. Similar to what we had these years but longer, commensurate to the more than 3 decades of rally off 1932 bottom.
That is just how things work whichever timeframe you look at. Yearly, monthly, weekly, daily, or intraday charts. Rallies will have corrections or consolidations in order to support further rallies. Big and time consuming rallies will have their corresponding big and time consuming corrections or consolidation ranges.
We rally again. A decade or 2 or better still 1-1/2 decade will best fit the decade chart if they can produce such chart using the computer. For now, you can do the charting manually on paper.
Rallies tend to taper off when the rally off the bottomest bottom started with a bang. And the rally from 1932 to 1965 was surely a big bang if not in price per se but in the percentage amount as Dow Jones rallied from $42 to $1,000. That was a 2,280 percent rally off the bottom. The rally from around $770 of 1982 to $11,750 of year 2000 was bigger in terms of numerical amount but amounts to 1,426%. The next few decades of rally should be lesser than that in terms of percentages as rallies tend to be hindered by the law of gravity as the price goes higher.
Then we will see if that final rally will be the topping pattern for the United States as it has risen to becoming the the number one global power in the world in the last century sustained into the early part of this century - or will it be able to consolidate all those gains and make do with further rallies in the latter part of this century.
Rallies tend to go in 3’s with 2 corrections or consolidation ranges in between — before the next bigger correction or consolidation range can happen. We did have 2 rallies so far since the Dow Jones “died” in 1932 and 2 corrections since then when viewed on the decade chart, one bar being one decade.
This time around, we have China, India, Russia, Brazil, and a host of other emerging markets to recon with in terms of economic performance. Japan is a secluded market and should be excluded from the race unless they change their trading habits.
But unlike military confrontations where the rise of a victorious warrior means the defeat of another; economic competition will often result in both gaining grounds as they compete with each other. There will be 1st, 2nd, and 3rd winners to say the least.
For now, we enjoy this ongoing recovery rally off a devastating bottom while we are still alive.
- Aarc
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