A ticker in New York announces the bankruptcy filing of Lehman BrothersMary Altaffer
One of the more interesting and accessible technical indicators for the stock market is where various indexes and subindexes are today relative to where they were before Lehman Brothers went bust, on Sept. 12, 2008.
"Many investors look at the market now in terms of "before Lehman" and "after Lehman," which was the day that Lehman Brothers went bankrupt and shook markets to their core in the following months," said Bespoke Investment Group, on its blog.
That was the start of some dark days for the stock market, with the financial crisis in full bloom. Although the S&P 500 had already fallen 20 per cent from its high in 2007, it would slide another 46 per cent to its multi-year low on March 9, 2009.
Similarly, the Dow Jones industrial average would fall another 42.7 per cent and Canada's S&P/TSX composite index would fall another 40.7 per cent.
So where are we now? Bespoke noted that major indexes are remarkably close to their pre-Lehman levels after the 13-month bull market. Pre-Lehman, the Dow closed at 11,421.99, meaning that the index has to rise a mere 3.2 per cent from its level at midday on Tuesday (which happened to coincide with a nasty downturn).
The broader S&P 500 is a little further off. It needs to climb 4.9 per cent to get back to its pre-Lehman level. The S&P/TSX composite index is not far off, needing to rise 4.8 per cent.
If and when these major indexes get back to their pre-Lehman levels, you can expect a lot of celebrating among bullish investors - and hand-wringing among the bears.
David Berman