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Stock Ideas Investors Daily Edge Why The Number 393 Is So Important
Stock Ideas Investors Daily Edge Why The Number 393 Is So Important 
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Here's a trade from "The Daily" and insights into our trading strategy: All you seem to hear about lately is Apple, and frankly, when a stock is so widely discussed and owned you have to start thinking about whether it is reaching a peak. That said, the stock is a Christmas powerhouse because... |
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| Why The Number 393 Is So Important |
| Wednesday, 17 December 2008 | ||||||||
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A little over a week ago, Rick Pendergraft pointed out the eerie similarities between the stock market in 1974 and today. It is quite startling when you realize how much the two have in common. Even the declines in the Dow are within a single percentage point of each other. That got me wondering if there was any correlation between the beginning and end of historical bull and bear markets. A quick search on the internet turned up a chart that showed bull and bear markets since 1942. Since the chart was created last September, it is a bit out of date, but the historical data serves our purpose. 
Utilizing this data, I was hoping to find that the recent market bottom would be 393 days after July 19, 2007. Unfortunately, that’s not the case. That would have put the bottom of this bear market on August 16th, when in fact the recent low (and by some estimates the end of the bear market) was three months later on November 20th. Then I took another look at the chart. As I mentioned, this chart was originally published on September 6, 2007. Looking at that date on the S&P chart, there is a higher close than July 19. The S&P actually hit a high on October 9, 2007 at 1565.15 before it began the current slide. Therefore, I re-ran the numbers using October 9 as the end of the bull market. Guess what day is 393 days later? No, it’s not November 21, that would be too perfect. However, November 21, 2008 is 408 days after the ‘revised’ end of the bull market, so only 14 days more than the average. What does this all mean? Well, if you are like Rick Pendergraft and me, the eerie coincidences lead you to believe that November 21, was the end of the bear market, and we are now in the beginning stages of the next bull market. It also allows you to make strange predictions, like this one: This bull market will last until May 11, 2013 when the S&P hits 1878.46
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