Market Analysis
1949-1956 Bull Market
The 1949-1956 bull market started in June 1949 and lasted for seven years gaining around 230%. The bull market ended in August 1956.
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 1949-1956 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 1949-1956 bull market on a 100-year chart with the Dow Industrial Average plotted as a monthly bar chart.
Chart 100yr: 1949-1956 Bull Market
Chart by stockcharts.com
As can be readily observed from the long-term 100-year market chart, the 1949-1956 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 1949-1956 bull market on a 20-year chart with the Dow Industrial Average plotted as a monthly bar chart.
Chart 20yr: 1949-1956 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 1949-1956 bull market higher which was spurred on with the rebuilding of Europe following the destruction caused by World War 2. Also economic growth was strong following the poor growth seen through the 1930s and 1940s.
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.
8-year Market Chart
The 1949-1956 bull market is shown again with a shorter time-frame on an 8-year chart plotted as a weekly bar chart.
Chart 8yr: 1949-1956 Bull Market
Chart by stockcharts.com
The shorter time-frame provides more detail. As the chart shows, the 1949-1956 bull market started in June 1949 and lasted for seven years.
The Dow Industrial Average gained around 230% and the bull market ended in August 1956 with the
The 1949-1956 bull market also had a correction in 1953. Market corrections are more severe than simple market pullbacks which normally appear in bull markets. With corrections, the market loses more and/or they last longer than pullbacks.
Market Chart: Rallies and Pullbacks
The 1949-1956 bull market is shown again with an 8-year line chart and two moving average indicators.
Chart MA: 1949-1956 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 bull market started with the first rally in June 1949 (noted on the chart as RL - which stands for Relative Low). This was followed with a pullback in June 1950 (the first RH - Relative High).
The sequence of rallies and pullbacks continues through to December 1952 (the 4th RH). The next pullback was more severe and is classified as a market correction.
The market correction ended in September 1953 and rallied strongly until 1956 where the market formed a Double Top.
The