Stock Market Clue from October 2002

What happened in the U.S. stock market during October 2002 could be an important clue for action in 2025.

From October 1999 to early 2000 the U.S. stock market experienced the greatest buying mania since mid – 1929.  The leading stock index in the post October 1999 rally was the Nasdaq 100 (NDQ).  After the major stock peak in early 2000 the U.S. had the largest stock market decline since the 1929 to 1932 bear market.  From 2000 to October 2002 NDQ led the way down.    

The weekly NDQ chart courtesy of Trading View illustrates what happened from 1999 to 2002.

From October 1999 to its peak in 2000 NDQ climbed 109%.

The gains from the three main U.S. stock indices after October 1999 are as follows.

Nasdaq Composite (IXIC) was up 94%.

S&P 500 (SPX) was up 25%.

Dow Jones Industrial Average (DJI) was up 17%.

In the devastating 2000 to 2002 bear market NDQ declined 83%. 

The losses from the three main U.S. stock indices are as follows.

IXIC was down 78%.

SPX was down 50%.

DJI was down 38%.

The NDQ was clearly the leader on the way up and on the way down.

The daily NDQ, IXIC, SPX, and DJI chart zooms in on the action in October 2002.

The NDQ made its bear market bottom on 10/08/02.  Two trading days later 10/10/02 the IXIC, SPX, and DJI made their respective bear market bottoms.

NDQ, not making another low on 10/10/02, was a very important clue, it had led the way down and was now leading the way up.  NDQ was relatively weaker than the three main indices, now it was relatively stronger.

Now let’s go to the post April 2025 rally and look at a daily chart of SPX, DJI, and IXIC.

In the current cycle NDQ was not the leader, after 04/07/25 it gained 44% vs. a 47% gain by IXIC.

So far SPX has gained 34% and the DJI has gained 25%.

The important point is that IXIC reached its peak two weeks before the SPX peak.  Curious, the leading index from April to mid-August is now the lagered. 

This subtle shift in relative strength could be the prelude to at least a two-month bear phase.

U.S. stocks are seasonally bearish from August to October.  Statistically September is the most bearish month for U.S. stocks.