WHEN WILL THIS OLD BULL MARKET END?
Transcript of WHEN WILL THIS OLD BULL MARKET END?
WHEN WILL THIS OLD
BULL MARKET END?
Paul Desmond, President
Lowry Research Corporationwww.lowryresearch.com
1962 1966 1970 1974 1978 1982 1987 1990 1994 1998 2002 2008 20??
-10%
?
-20%
-30%
-40%
-50%
-60%
THE HISTORY OF BEAR MARKETS
• 1929 DJIA losses not recovered until 1955
• 1962 losses set prices back to 1958
• 1973-74 decline set prices back 13 years
• 2000-2003 bear market cut portfolios in half.
• 2007-2009 losses set S&P 500 back 15 years
WE’VE BEEN DEALING
WITH THE APPROACH OF
BEAR MARKETS FOR MORE
THAN A HUNDRED YEARS,
WHY DON’T WE HAVE
SOME BETTER ANSWERS?
CAUSE AND EFFECT
THE CAUSES ARE ALWAYS
CHANGING
THE EFFECTS ARE
AMAZINGLY CONSISTENT
The LAW of
SUPPLY and
DEMAND
Chapter One of Virtually Every
Economics Textbook states,
“The Law of Supply and Demand
is the Foundation …..
…..the Starting Point…..
of ALL economic analysis.”
THE LAW OF
SUPPLY AND DEMAND
If there is more Demand for a
commodity than there is a
Supply of that commodity, the
price Will Rise.
THE LAW OF
SUPPLY AND DEMAND
If there is a greater Supply of
a commodity than there is a
Demand for it, the price
Will Fall.
THE LAW OF SUPPLY
AND DEMAND
ONLY DEALS WITH
EFFECTS
COMPLETELY IGNORES
CAUSES
SUPPLY AND
DEMAND
IS A
UNIVERSAL
LANGUAGE
AT EVERY MARKET TOP,
FIRST, DEMAND BEGINS TO
FADE, CAUSING PRICES TO
WEAKEN.
SECOND, WEAKENED PRICES
CAUSE SUPPLY TO EXPAND.
SELECTIVITY AT MAJOR MARKET TOPS
TOP DAY % STOCKS @ % AT OR < 2% % OFF 20% % OFF 30%
FOR DJIA NEW HIGHS OF NEW HIGHS OR MORE OR MORE
09/03/1929 2.30%
LOWRY RESEARCH
SELECTIVITY AT MAJOR MARKET TOPS
TOP DAY % STOCKS @ % AT OR < 2% % OFF 20% % OFF 30%
FOR DJIA NEW HIGHS OF NEW HIGHS OR MORE OR MORE
09/03/1929 2.30% 15.62% 31.84% 18.77%
LOWRY RESEARCH
IN 1927 TWO BANKERS FROM CLEVELAND TRUST DEVELOPED
THE ADVANCE-DECLINE LINE
1928
1929
1961 1962
1972 1973
1987
Dow Jones Industrial Average
NYSE Advance-Decline Line
1999 2000
2007
THE KEY TO
DETECTING MAJOR
MARKET TOPS IS TO
OBSERVE SIGNS OF
INCREASINGLY
EXTREME
SELECTIVITY.
MARKETS ARE NOT HOMOGENEOUS.
A SINGLE “ALL-ISSUES” ADVANCE-DECLINE LINE HIDES A GREAT AMOUNT
OF IMPORTANT INFORMATION.
LOWRY RESEARCH
➢ SMALL-CAP BREADTH USUALLY WEAKENS FIRST . . .
➢ THEN MID-CAP BREADTH BEGINS TO WEAKEN . . .
➢ BIG-CAP BREADTH IS VIRTUALLY ALWAYS THE LAST TO WEAKEN.
LOWRY RESEARCH
SO, WHERE ARE WE NOW?
LOWRY RESEARCH
IN CONCLUSION….
BASED ON THE 88 YEAR HISTORY OF THE LOWRY ANALYSIS, THE PROBABILITIES FAVOR
AT LEAST ANOTHER SIX MONTHS OF FURTHER GAINS BEFORE
THE FINAL HIGHS IN THE DJIA AND S&P 500 (BIG-CAP) INDEXES
SEPT. 25, 2017
LOWRY RESEARCH
BUT, NOW IS THE TIME TO BEGIN TO
SLOWLY CULL STOCKS AS THEY STOP PARTICIPATING IN THE UPTREND……
INITIALLY REINVESTING IN STRONG LARGER-CAP STOCKS……
AND EVENTUALLY BEGIN BUILDING A HEAVILY DEFENSIVE STRATEGY.
Lowry Research
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1929-1930