Wednesday, May 08, 2013

Stock Market Hits Outer Space

The stock market reached escape velocity today, topping a theoretical limit of a Dow of 15,000, an S&P 500 of 1,600, and a NASDAQ of 3,500, for a total of 20,100. That is the ceiling of our New FOX Index. Today’s close saw the Dow at 15,105, the S&P 500 at 1,633, and NASDAQ--still below its 3,500 atmospheric limit--at 3,413. That 21,151 total for the three indexes puts the New FOX Index into outer space by +51 (see chart).

During the peak of the boom in early 2000, the NASDAQ hit its all-time high of 5,049, before taking a long slide down to 1,114 in October 2002--a drop of 78%. That compares to the Dow’s Great Depression fall of 89% between 1929 and 1932. NASDAQ is now 58% of the way back from 1,114 to the peak of 5,049, having just now exceeded 2/3rds the the 2000 peak’s value.

In the first quarter of 2000, when NASDAQ and the boom topped out, the Dow’s high close was 11,773, and the S&P’s high was 1,527. So the peak for the three indexes combined, not on the same day, was 18,349. We are well above that level now.

Please note: the average length of 33 bull markets since 1900 is 2.1 years, and the 5 that lasted more than 3.6 years ended badly. The current bull market is over 4 years old.

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