Market Analysis
1915-1916 Bull Market
The 1915-1916 bull market started in December 1914 and lasted for nearly two years with the market gaining around 110%. The bull market ended in November 1916.
Charts from stockcharts.com are used to analyze all of the market cycles that have occurred over the last hundred years. Analyzing the market cycles with charts gives stock investors a visual representation of how the stock market moves over time.
The Dow Industrial Average is used to analyze the 1915-1916 bull market and all market cycles prior to 1957 (The S&P 500 index was formed in 1957 and all market cycles from 1957 are analyzed using the S&P 500 index).
100 Year Market Chart
The following chart shows the 1915-1916 bull market on a 100-year chart with the Dow Industrial Average plotted as a monthly bar chart.
Chart 100yr: 1915-1916 Bull Market
Chart by stockcharts.com
As can be readily observed from the long-term 100-year market chart, the 1915-1916 bull market is just one of many bull markets that have occurred.
The 100-year market chart also shows a 240-month simple moving average which has spent most of the last hundred years trending upwards. This shows that over the long-term the market has broadly continued higher as the moving average followed the Dow Industrial Average higher.
20-year Market Chart
The following chart shows the 1915-1916 bull market on a 20-year chart with the Dow Industrial Average plotted as a monthly bar chart.
Chart 20yr: 1915-1916 Bull Market
Chart by stockcharts.com
A 12-month simple moving average is also plotted on the 20-year market chart. The 12-month moving average is a useful indicator used in Technical Analysis for highlighting market cycles. As the 20-year market chart shows, the 12-month moving average followed the 1915-1916 bull market higher.
Most investors new to the stock market are under the impression that the stock market only moves in the direction of the current market cycle.
In reality, the stock market moves in cycles and alternates between bull markets (where stock prices broadly increase) and bear markets (where stock prices broadly decline).
Fortunately for investors, bull markets are usually longer than bear markets. This means that stock prices spend more time increasing in value than they do losing value.
Bull markets last anywhere from two years to around a decade, whereas bear markets are shorter and usually last a year or two and sometimes three.
3-year Market Chart
The 1915-1916 bull market is shown again with a shorter time-frame on a 3-year chart plotted as a weekly bar chart.
Chart 3yr: 1915-1916 Bull Market
Chart by stockcharts.com
The shorter time-frame provides more detail. As the chart shows, the 1915-1916 bull market started in December 1914 and lasted for nearly two years. The Dow Industrial Average gained around 110% during this period.
World War I started in July 1914 after the assassination of Archduke Franz Ferdinand and lasted until November 1918. The stock market closed when the war started but resumed five months later in December 1914.
Interestingly, the stock market rallied when it reopened, but this was probably due to the market opening at a significantly lower level than what is was when the stock market closed at the start of the war.
The 1915-1916 bull market came to an end in November 1916 with the 1917 bear market which lasted for a year with the Dow Industrial Average losing around 40%. The 40% loss was around a third of the 110% gain from the 1915-1916 bull market.
Market Chart: Rallies and Pullbacks
The 1915-1916 bull market is shown again with a 3-year line chart and two moving average indicators.
Chart MA: 1915-1916 Bull Market
Chart by stockcharts.com
The above line chart for the Dow Industrial Average shows a 52-week (long-term) and a 12-week (short-term) simple moving average.
The 52-week moving average (purple line) broadly slopes upward following the bull market.
The 12-week moving average (orange line) broadly identifies the rallies and pullbacks that occurred.
The first rally started the bull market in December 1914 and is noted on the chart as RL (which stands for Relative Low). This rally peaked in December 1915 and is noted as RH (Relative High).
The market then pulled back until July 1916 (the 2nd RL on the chart). From here the market rallied a second time until it peaked in November 1916 (the 2nd RH on the chart) which was the end of the 1915-1916 bull market.
The 1917 bear market followed the 1915-1916 bull market.