Market Analysis
1922-1929 Bull Market
The 1922-1929 bull market started in August 1921 and lasted for over eight years with the market gaining around 550%. The bull market ended in October 1929.
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 1922-1929 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 1922-1929 bull market on a 100-year chart with the Dow Industrial Average plotted as a monthly bar chart.
Chart 100yr: 1922-1929 Bull Market
Chart by stockcharts.com
As can be readily observed from the long-term 100-year market chart, the 1922-1929 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 1922-1929 bull market on a 20-year chart with the Dow Industrial Average plotted as a monthly bar chart.
Chart 20yr: 1922-1929 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 follows the 1922-1929 bull market higher, but the moving average did slope downwards during 1923 as the bull market paused with the 1923 market Correction.
This bull market was fueled by the roaring twenties with its surging economy. The use of automobiles was rapidly increasing. Homes using electricity surged as did the manufacture of electrical appliances.
The roaring twenties along with its impressive bull market abruptly ended with the stock market crash in October 1929. The eight year long bull run had amused a whopping 550% gain.
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.
9-year Market Chart
The 1922-1929 bull market is shown again with a shorter time-frame on a 9-year chart plotted as a weekly bar chart.
Chart 9yr: 1922-1929 Bull Market
Chart by stockcharts.com
The shorter time-frame provides more detail. As the chart shows, the 1922-1929 bull market started in August 1921 and lasted for over eight years. The Dow Industrial Average gained around 550% which to date is the second highest any bull market has ever gained (the highest was the 1988-1999 bull market with a 600% gain).
The chart also shows the market crash that ended the bull market in October 1929 and started the Great Depression of the 1930s.
Market Chart: Rallies and Pullbacks
The 1922-1929 bull market is shown again with a 9-year line chart and two moving average indicators.
Chart MA: 1922-1929 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, but this bull market had a correction during 1923 which lasted for seven months. This can be seen with the 52-week moving average flattening and sloping down during 1923.
The 12-week moving average (orange line) broadly identifies the rallies and pullbacks that occurred.
The first rally started the bull market in August 1921 and is noted on the chart as the first RL (which stands for Relative Low). This rally progressed until March 1923 and is noted as first RH (Relative High).
The Dow Industrial Average then pulled back for seven months to bottom in October 1923 (the 2nd RL on the chart). This is quite a long pullback and is best referred to as a market correction. Most pullbacks last from a month to three or four months.
The market then broadly rallies through to early 1926 (the 2nd RH on the chart) with some minor pullbacks along the way before the more significant pullback occurred in 1926 (the 3rd RL).
The stock market then resumes its upward trajectory and really begins to pick up pace in 1928 to finally peak in October 1929 (the 3rd RH) where the bull run came to an abrupt end.
The end to the 1922-1929 bull market would become to be known as Black Thursday which saw the biggest market crash in history.
The 1930-1931 bear market then followed which started the Great Depression of the 1930s that ultimately lead to World War 2.