"The chart above features two brackets. The first depicts a run-of-the-mill market decline of 32%, which is the historical average of how market cycles are completed. Such a decline would wipe out more than half of the recent bull market advance. The second bracket depicts a 39% bear market decline, which is the historical average for cyclical bear markets that take place within secular bear market periods.
In recent weeks, market conditions have established an overvalued, overbought, overbullish, rising-yield syndrome in a mature bull market; conditions that uniquely marked the peaks of advances in 1929, 1972, 1987, 2000, 2007, and 2011 (see A Reluctant Bear’s Guide to the Universe). The instance in 2011 preceded a forgettable market decline near 20%. The other points represent a Who’s Who of tops preceding the most violent market losses in history – even if the most severe outcomes were not immediate. While the 1987 and 2000 instances coincided with the exact market peaks, the average lead time to the market’s ultimate peak was about 4 weeks, and in 2011 took as long as 15 weeks. In every case but 2011, the market peak was within 3% of the point that this syndrome emerged, with the largest gain being a 6% advance observed in the 2011 instance. It is impossible to know whether the recent advance will remain within these prior ranges. The record-high of the S&P 500 was 1565 on October 9, 2007, and that level is only a few percent away. With sentiment already ebullient on nearly every objective measure, a new market high would put a cherry on top, and that should not be ruled out."
http://www.hussman.net/wmc/wmc130218.htm
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