The Bottom of the 1981–1982 Bear Market

The 1980–1981 bull market topped in April 1981, and the subsequent bear market did not reach its final low until nearly 16 months later in August 1982, after the DJIA had declined 24%. Although the ultimate low of the bear market was not established until August, the bottoming process actually started taking shape in late January 1982.

During this time, the market embarked on its first 90% Upside Day of the ongoing bear market, implying a level of Preliminary Support had potentially been established. In addition to the strong wave of buying, volume also notably increased on the 90% Up Day, which is evident in Figure 4.4 (Point A). Finally, Selling Pressure had peaked months prior, back in late September 1981 (Point B), and was in the midst of a steady move lower, indicating diminishing Supply. This contraction in Supply was accompanied by steadily increasing intermediate term Demand, as indicated by the rise in Buying Power that had been underway also since late September 1981 (Point C).