The Dow Jones erased his losses this year. What will be next?

Wall Street

One of the main indices of the New York Stock Exchange managed to climb to the level at which it was last before the outbreak of a coronavirus pandemic. The Dow Jones erased the fall from the spring and is at a crossroads. Will it continue to grow or will a bearish mood return to Wall Street?

Historical data on the development of the Dow Jones index suggests that US stocks may have another almost two years of growth ahead of them, as well as the arrival of bears before the end of this year. How is it possible? If we look at the data from 1900 and focus on the moments when the shares erased the previous fall, the downward trend of the trend came after an average of 21 months.

So if Wall Street were to follow this average now, the stock would rise at least until August 2022. The problem with this view, however, lies in the average itself. There is a lot of variability behind the average, which is also the case in this situation. If we focus on the shortest period between the moment of settlement of the previous decline and the return of bearish mood, we find that it lasted only 33 days. This would mean that Wall Street shares will start to fall again in the second half of December this year.

However, analysts agree that it will depend on the process of approving an effective coronavirus vaccine and on central banks, which, with their relaxed policies, feed the optimistic mood on the stock exchanges.


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