alevin
10-19-2009, 07:22 AM
October 19, 2009 The Stock Market Has Never Been This (Intermediate-Term) Overbought
John P. Hussman, Ph.D.
All rights reserved and actively enforced.
Certain years are memorable of course, marking the beginning or end of recessions, major market movements, major economic events, and the like. But individual dates are generally forgotten unless they represent some sort of outlier.
In reviewing the status of the market late last week, the condition of the data was something of an anomaly in that regard.
The anomaly relates to market action, where we can no longer find a single historical instance where stocks were more overbought on the combination of short- and intermediate-term measures we respond to most strongly. Indeed, only one instance comes close, which is November 28, 1980. Now, if that date doesn't ring a bell, I have to admit that it didn't resonate with me either at first.
On that date, the stock market was just a few months into a fresh economic recovery following the 1980 recession, there was little to identify it as a date to remember.
As it happened, however, November 28, 1980 was the peak of the furious advance in S&P 500 driven by enthusiasm over "less bad" economic news, though with little proven economic strength. It was the last day of the 1980 bull market. The economy later proved to have been in a short lull within a double-dip recession, taking stocks to their final lows in 1982.
http://www.hussman.net/wmc/wmc091019.htm
John P. Hussman, Ph.D.
All rights reserved and actively enforced.
Certain years are memorable of course, marking the beginning or end of recessions, major market movements, major economic events, and the like. But individual dates are generally forgotten unless they represent some sort of outlier.
In reviewing the status of the market late last week, the condition of the data was something of an anomaly in that regard.
The anomaly relates to market action, where we can no longer find a single historical instance where stocks were more overbought on the combination of short- and intermediate-term measures we respond to most strongly. Indeed, only one instance comes close, which is November 28, 1980. Now, if that date doesn't ring a bell, I have to admit that it didn't resonate with me either at first.
On that date, the stock market was just a few months into a fresh economic recovery following the 1980 recession, there was little to identify it as a date to remember.
As it happened, however, November 28, 1980 was the peak of the furious advance in S&P 500 driven by enthusiasm over "less bad" economic news, though with little proven economic strength. It was the last day of the 1980 bull market. The economy later proved to have been in a short lull within a double-dip recession, taking stocks to their final lows in 1982.
http://www.hussman.net/wmc/wmc091019.htm