100 Year Stock Market (Dow) Chart with 25-Year Moving Average2010 Year-End Stock Market Update.
Above is the chart introduced and analyzed in 100 years of stock market (Dow Jones) history -- with the addition of the 25-year moving average (click chart to expand). As before, it begins around 1900; it uses this past month for this year's close. It shows that the market rarely falls very far below its 25-year moving average. When this was originally posted, I noted that the one big exception to the rule was the crash that preceeded the Great Depression. Since February '09, I have been updating this graph approximately once a month.
March, First Quarter/Year-To-Date & Recovery-To-Date ReviewIn early March 2009, I posted Dow At 25-Year Moving Average. The Dow continued lower for several more days before bottoming at 6547 on March 9 --
very near the 25-year moving average at the time. Since then, the Dow has rallied over 4300 points. If we treat the March 31 close of 10857 as the 2010 close, the moving average is now at 7300. (See the chart above. Click to expand.)
March was a very good month; the market was up about 530 points (5.1%). Year-to-date, at the end of the first quarter, the Dow is up 429 points, 4.1%. The quarter closed just off its 52-week high of 10907, set the day before.
In total, this bull market is now up close to 66% in a little less than 13 months. For reference purposes, the largest bear market rally following the 1929 crash lasted about 5 months, during which the Dow rose approximately 50%. Given that, it would not be unreasonable to assume that we are "home free." However, even at this late date I would not be surprised if this ultimately turns out to be an extended bear market rally. (For a more detailed discussion of bear market rallies following the 1929 crash, see The 1929-1932 Stock Market Crash Revisited).
The Next 10 YearsMy stock market projection model currently projects 10-year returns in the neighborhood of 5.5% as of the beginning of 2010. As a result, I am concerned that long-term returns from current levels are likely to be below average.
Related Reading:Next Monthly Update
10-Year Stock Market Projection shows how expected returns have changed over the last 10 years.
Projecting Stock Market Returns introduces the projection methodology.
Dow Yearly Returns since 1929 (bar graph)
What was the Dow rate of return for the last 5, 10, 20 years?
What has the range of returns (minimum & maximum) been for 1, 5, 10, 20-year periods?
Who's Afraid of a Sideways Market?: Interesting perspective on long flat periods from Morningstar.
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Last modified: 1/12/2011