Chart of the Day - Friday, March 27th, 2020

Today’s Chart of the Day was shared on Twitter by The Chart Store (@TheChartmeister). It's a chart of the Standard & Poor's Composite during the Great Depression in 1929-1932. Yesterday there was some noise from the media that we had just entered into a new bull market. Here's a headline from a prominent financial news outlet: "Breaking: A new bull market has begun. The Dow has rallied more than 20% since hitting a low three days ago, ending the shortest bear market ever." We think headlines like this are misleading and premature, at best. For starters, they measured price on an intraday basis rather than a closing basis. On a closing basis, the S&P 500 was up less than 18% from Monday's low. Secondly, it's quite common to see massive rallies within a prolonged downtrend. As you can see from the chart, the index bounced more than 20% on five separate occasions amid an epic 86% decline. It may seem extreme to use The Great Depression as an example. However, crashes like 1929 and 1987 are some of the only historical comparisons that match the size and magnitude of the recent decline.