In 1987, the market corrected 36% and took 23 months to make a new high. It took 21 months to make a new high from the low of the correction.
Between March of 2000 and October of 2002, the market corrected 51% and took 88 months to make a new high. It took 57 months to make a new high from the low of the correction.
From October of 2007 to the present, the market has corrected 38%.
It appears that in major corrections of greater than 30% in the last 25 years, the recovery takes almost as long as the last complete up and down cycle. Note that I defined the start of the cycle as the point where the market first traded above the current correction low in the last upward wave. A decent estimate of the time of the recovery is the length of time of the last complete cycle.
In 1987, the predicted recovery from the low is 20 months versus 21 months actual recovery time. In 2002, the predicted recovery from the low is 69 months versus 57 months actual recovery time.
So far, the last up and down cycle is 64 months. If we are at the low of this correction, we may expect a 64 month period before making a new high, if this correlation remains valid.
Charles
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