Dow Jones Industrials 1929 Pattern

There are some patterns which almost all Major World Indices have followed in Bull Market has well as Bear Market, since my opinion is we are in a bear market lets elaborate on the patterns in Bear Market.

Pattern of US Dow Jones Industrial Average in the Biggest Bear Market ever, the era of Great Dep 1929 -
The Dow Jones topped out at 386 in Sep 1929, it is said that this was an era when everybody believed that markets are made to rise forever, be in the green always, never drop and go in the red. The bottom was at 41 in Jul 1932 breakdown of more than 80% in 3 yrs.
Now let’s look at the big downfalls, rallies and consolidation phases that happened in this bear market
The Dow Jones fell from 386 in Sep 1929 to 320 in Oct 1929 app 16.6% from the top which everyone might have thought is a correction to the major trend of the bull market, as the Dow Jones gave a pull back rally that took it at 359 (app 13.3%) within 14 days. The mother of all bear runs took over here wherein the Dow Jones dropped from 359 in Mid October to a low of 195 in Mid November a drop of app 45% within a month’s time frame. Again a pull back rally of somewhat less magnitude took the Index at 267 in Dec app 33.3% within a month. Consolidation Phase kicked in wherein the Index rallied upwards to 296 in April 1930 app 3% gain per month, downtrend followed immediately and the Dow Jones fell to 208 by June 1930 a drop of 88 points making app 30% drop in 2 months, consolidation phase emerged over yet again with the Dow Jones rallying to 248 in September app 7% gains per month. Downtrend took over and Dow Jones dropped to 154 in Dec 1930 a drop of app 40% in 3 months time frame. Pull back rally took the reins which saw the Index rally towards 197 in Feb 1931 averaging a return of 12% over 2 months. As usual Downtrend took over the proceedings and the index dropped to 120 in June again app 40% down from the previous top followed by a Pull Back Rally driving the Index towards 158 in June giving a return of 33% in 1 month time only. Consolidation Phase took over and with small ups and downs the Index remained at 140 in August after which a fresh downtrend bought it to 86 at the start of Oct and the downtrend too gave a negative return of 33% in 1 month time frame only. As Usual a pull back rally carried the Index to 120 in Nov again gains of 33% in one months timeframe only followed by a similar magnitude drop which bought the index to 70 in Jan 1931, Consolidation Phase took over and the Index was trading at 90 in March 1932. Final Blow saw the Index drop to 40 in July which was the low of the era.

Conclusions
1) The First big Downfall could be followed by a pull back rally of somewhat less magnitude as short covering and value buying pulls the Market up.
2) Bullish think tank is convinced that the storm is behind while the Bearish camp looks for opportunities to go short as consolidation reins.
3) Big expectations built up during the Bull Run which in reality are worth nothing pull the market even down.