Market Analysis
1978-1980 Bull Market
The 1978-1980 bull Market started in February 1978 and lasted for nearly three years with the market gaining over 60%. The bull market ended in November 1980.
Charts from stockcharts.com are used to analyze all of the market cycles that have occurred over the last ninety years. Analyzing the market cycles with charts gives stock investors a visual representation of how the stock market moves over time.
The S&P 500 index is the industry benchmark and is used to analyze the 1978-1980 bull Market and all market cycles from 1957.
The S&P 500 index was introduced to the stock market in 1957 and the index included back tested data to 1925 based on the historical prices of the stocks that made up the index. This provided historical data for comparison with the Dow Industrial Average.
90 Year Market Chart
The following chart shows the 1978-1980 bull Market on a 90-year chart with the S&P 500 index plotted as a bar chart with quarterly bars.
Chart 90yr: 1978-1980 Bull Market
Chart by stockcharts.com
As can be readily observed from the long-term 90-year market chart, the 1978-1980 bull Market is just one of many bull markets that have occurred.
The 90-year market chart also shows an 80-quarters (20-year) simple moving average which has spent most of the last ninety years trending upwards. This shows that over the long-term the market has broadly continued higher as the moving average followed the S&P 500 index higher.
20-year Market Chart
The following chart shows the 1978-1980 bull Market on a 20-year chart with the S&P 500 index plotted as a monthly bar chart.
Chart 20yr: 1978-1980 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 1978-1980 bull Market higher. This bull market brought an end to the 1977 Bear Market.
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.
5-year Market Chart
The 1978-1980 bull Market is shown again with a shorter time-frame on a 5-year chart plotted as a weekly bar chart.
Chart 5yr: 1978-1980 Bull Market
Chart by stockcharts.com
The shorter time-frame provides more detail. As the chart shows, the 1978-1980 bull Market started in February 1978 and lasted for nearly three years.
The S&P 500 index gained around 60% and the bull market ended in November 1980 with the 1981-1982 Bear Market.
Market Chart: Rallies and Pullbacks
The 1978-1980 bull Market is shown again with a 5-year line chart and two moving average indicators.
Chart MA: 1978-1980 Bull Market
Chart by stockcharts.com
The above line chart for the S&P 500 index 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 1978-1980 bull Market started in February 1978 (noted on the chart with the first RL - Relative Low) and rallied until September 1978 (the first RH - Relative High).
The S&P 500 index continues to rally and pulls back again. This cyclic process continues several times. The market then surged higher with the final leg from April 1980 (4th RL) until November 1980 (4th RH). This was the market top and the start of the following 1981-1982 Bear Market.