Stock Market Crash 2020 – DJIA and S&P 500 50-Year Charts
Stock Market Crash 2020 – Update
Why are these charts so important?
They give you the view of the stock market indices for the past 50-years through 14 periods of economic expansion and contraction. With investors not knowing what the future holds, the past gives a pretty clear indication about two very important indicators:
The first is the 48-month moving average (plotted in light blue). As you can see from the charts, the markets have nearly hit this important long-term technical indicator…which it has done many times over the past 50-years…only to bounce back up. If the markets can cling to the 48-month moving average, it’s likely we will avert a recession. A sustained breach below this indicator has been indicative of an upcoming recession – as you can see on both charts. The chart legend is at the bottom of each chart.
What is also very important are the earnings adjusted for extraordinary items (are plotted in green and read from the left scale). Quarterly earnings have seen a decline in 2019, and more pressure on the US economy will mean greater decline in reported earnings. Earnings are set on the chart at at 1:15 ratio, so that a dollar in earnings on the left scales is mapped to $15 in price on the right scale. Dividends (plotted in red) are also set on the same left scale as earnings.
Using the past as your guide, you can use these charts to help better understand the relationship to price, earnings, dividends, and the 48-month moving average during other periods of market turbulence. The box in the upper left corner shows the growth rates over time for the past 50 years.
We will be updating these charts periodically over the next few weeks and make them available on SRC’s home page > Quick Links. You may want to bookmark this page so that you can access the updated charts.
We hope that you find these charts to be a helpful resource as we move forward.
Securities Research Company
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The charts and other information appearing in this publication were derived from data provided by one or more third party information sources. While these sources are generally reliable, Securities Research Company does not guarantee or warrant the accuracy, adequacy or completeness of the contents of this publication. Securities Research Company will not be liable for any loss or damage caused by a reader’s reliance on the content of these, which is for informational and educational purposes only, and should not be considered investment advice. Data is currently obtained from Refinitiv. Such data is provided AS IS and Securities Research Company and its suppliers make no warranties, express or implied, as to merchantability, fitness or any other matter.