Stock market history from 1870 to 1879.

With the 1870’s we get a new president Ulysses S. Grant who served two terms as a republican president before president Hayes saw the decade out. There's nothing quite like a new president to give people new hope. Much research has gone into the presidential cycle of the stock market which is a fascinating study in its own right and well worth studying by stock market historians. Just as human nature does not change so the stock market goes in cycles of greed followed by fear which equates to buying and selling these are reoccuring themes in the stock market.

Let's be transported back in time to 1870 and see how the stock market is doing. In those days a stock exchange seat cost $4,600.00 to purchase. And in 1870 you would have wondered whether it was worth the price because the market moved in a very narrow range indeed pivoting around the 35 point level. In a narrow trading range of 33 points to 37 points. Of course this type of trading range makes a great breakout trade, buying above resistance and selling below support if you have the patience to wait for it. 1871 saw the market break through the 37 point level towards the 40 point level but retraced back towards the 39 points level. The first quarter of 1872 saw a sharp break above the 40 point level with the stock market reaching 47 points for the first time in its recent history, it then move sideways for the rest of the year but still closed above the 40 point level. It was a very bullish year 1871. Now 1872 saw some interesting changes and innovation, the first commercial typewriter came into use which we know would be a huge success and a bestseller in its time until technology replaced it. That is another theme in the stock market, companies do well until technology makes their products obsolete if they don't change with the times. They rapidly go out of business and your shares or stocks are worthless. The hours of the stock market were established between 10:00 AM to 3:00 PM. 1873 was a pretty bad year for the stock market because the exchange was closed. Jay Cook and company filed for bankruptcy and there were 57 exchange failures by the end of the year, as a consequence the stock market fell sharply all year ending the year around 27 points, so it was a real bear market year with over a 20 point fall in the market and lots of turmoil. No doubt some corruption had entered the market as it reached the dizzy heights of over 40 points. There is a lesson to be learned when the stock market reaches an all time high, watch out for corruption within companies and even the stock market itself. Human nature never changes and there is nothing new about today’s stock market. The more things change the more they remain the same. Remember that!

Between 1874 and 1876 the stock market mainly went sideways within a narrow trading range between 33 points and 42 points. The market fell sharply during the first quarter of 1877 reaching a low for the year of 25 points it then bounced and steadily rose during the second half of the year to reach 38 points. This was the start of a very nice bull market which would occur over the next couple of years. 1879 was a very good bull market year with the market moving from 35 points to 48 points during that one year. The decade came to an end with the market at an ALL TIME HIGH after some pretty awful times, that’s the way it goes. Notice again a good two year bull market. Today a good time frame is about eighteen months for solid gains in a bullish stock.

See you next time in the 1880’s.