Dow Jones Industrial Average (DJIA) Analysis Year to Date; First three months data back to 1984.

Following my analysis of the FTSE 100 stock market index, I thought it would be useful to undertake a similar review of the Dow Jones Industrial Average Index, in an effort to determine where we are in the cycle.  In the UK during the first few months of the year all the stock market news was about how it had been the worst start of the year for thirty years, but when I checked the data things had gotten back on track.  I suspect the same has happened with the Dow.

As of 04/03/16 the DJIA index closed at 17,006.77, a fall of 418.26 points form the start of the year, representing a decline of around 2.4%.  This is obviously a far cry from the doom and gloom, the media commentators were expunging.  Having said that we have to take a look at the market low point for 2016, which occurred on 11/02/16, when the index finished the day at 15,660.18, a fall of 1,764.85, over 10% from the start of the year.  This was a significant decline often termed as a correction, but instead of falling further the market found its’ feet and rallied to the position we are at now.

It is also useful to consider where we currently stand in relation to the all time high the Dow achieved on 19/05/15.  On this day the index closed at 18,312.39.  The decline in the index to the low point achieved this year on 11/02/16 is 2,652.21, which represents a fall of 14.5%.  While this is substantial it does not represent the index moving in to a bear market phase, which the experts say is 20%.  Just for information in the UK the FTSE from the all time high to the low in 2016, fell by over 20% (potentially triggering a so called bear market phase).  From the all time high until the close on 04/03/16 the index has fallen by 1,305.62, representing just over 7%, so at the moment we are no longer in correction territory.

I have provided below the percentage change in the Dow Jones Industrial Average for the first three months of the year since 1984.

Year January February March 1984 -3.02% -5.41% 0.89% 1985 6.21% -0.22% -1.34% 1986 1.57% 8.79% 6.41% 1987 13.82% 3.06% 3.63% 1988 1.00% 5.79% -4.03% 1989 8.01% -3.58% 1.56% 1990 -5.91% 1.42% 3.04% 1991 3.90% 5.33% 1.10% 1992 1.72% 1.37% -0.99% 1993 0.27% 1.84% 1.91% 1994 5.97% -3.68% -5.11% 1995 0.25% 4.35% 3.65% 1996 5.44% 1.67% 1.85% 1997 5.66% 0.95% -4.28% 1998 -0.02% 8.08% 2.97% 1999 1.93% -0.56% 5.15% 2000 -4.84% -7.42% 7.84% 2001 0.93% -3.60% -5.87% 2002 -1.01% 1.88% 2.95% 2003 -3.45% -2.02% 1.28% 2004 0.33% 0.91% -2.14% 2005 -2.72% 2.63% -2.44% 2006 1.38% 1.18% 1.05% 2007 1.27% -2.80% 0.70% 2008 -4.63% -3.04% -0.03% 2009 -8.84% -11.72% 7.73% 2010 -3.46% 2.56% 5.15% 2011 2.72% 2.81% 0.76% 2012 3.40% 2.53% 2.01% 2013 5.77% 1.40% 3.73% 2014 -5.30% 3.97% 0.83% 2015 -3.69% 5.64% -1.97% 2016 -5.50% 0.30% Rises 20 22 22 Falls 13 11 10

It is difficult at the moment to predict which way the index will go.  It is a fine balance whether we will head again into correction or even worse bear market territory, or, the possibility of heading back towards all time highs.  I have a feeling that it may be downwards, but that is just my view, and, I would be very interested to hear yours, so feel free to post a comment below.

At the end of the day we all make and take responsibility for our own investment decisions, and, as such I provide this data for information only as a means of debate.  It should not be used for any investment decisions you make.

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