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Dow Jones Industrial Average History

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The stock market bull from 1921's bull signal #07 through 1923's bear signal #01 was not that impressive in terms of magnitude. But its longevity was appreciated following eight horrible years of Woodrow Wilson's presidency. The old Indicant model would not have signaled bear in 1923 since the Dow never fell below the Mid-term Indicant's yellow curve. At the time of bear signal #01 on May 4, 1923, the Indicant account balance was at $44,946. That was beating buy and hold's account balance of $14,481 for a 210.4% competitive advantage by the Mid-term Indicant over buy and hold.

As you can see, the Indicant endured a small loss at bear signal #03. Again, the model is not perfect, as the Indicant 's performance advantage dropped to 209.7% over buy and hold at bear signal #05 on Mar 21, 1924.

 

President Warren G. Harding's four-year term led to a near-perfect stock market configuration. Although he died in office the economy and stock market bull prevailed despite the recession that was underway at the time of his death. Although the Tea Pot Dome scandal marred his administration, the bad guys were arrested. He could be thought of as a great president, as his promise was to return the country to normalcy. In essence, he was going to attempt to do what all great politicians do; that is, undo prior political damage.

This is the third consecutive post election year where the market found bottom in 1921. That phenomenon is typically reserved for the mid-term election year.

The DJIA Index is congruent with presidential election cycle historical standards with market falling in the post election year of 1920. After eight years with an egomaniac, such as Woodrow Wilson, it took quite a bit of time to overcome the psychological impact of Wilson's lunacy. Also, without any disrespect to President Harding, the stock market and economy enjoyed bullish fervor due to the weakening political influences following his death.

The stock market found bottom ahead of schedule late in the post election year of 1921. The mid-term election year of 1922 was uncharacteristically bullish. The pre-election year of 1923 was incongruent with historical standards while the election year, 1924,  performed as expected.

As you can see, the stock market bear coincided with the start of the 1923 recession, as it did not deliver bearish expressions six to nine months ahead of this recession. The stock market bear was not enthusiastic as the economic mood was still enjoying the escape from Woodrow Wilson's control freak nature.

As you can see, bullish seasonality (pink) is incongruent to historical standards during the bearish market periods and bearish seasonality (white) is also incongruent to historical standards during bullish periods.

 

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