The Stock Market in December 2002 and Now

"No Axe" in a comment below makes the following point:

The current status of the markets is strikingly similar to mid-December 2002 in the previous bear market. On December 10, 2002, the FOMC released a ho-hum announcement that resulted in uncharacteristically low volatility in the S&P 500 that day (similar to Wed's announcement) and the time period was close to the end of the year (paint the tape scenario similar to end of Q2 09 now). Though the S&P 500 had just failed to take out a previous high in 2002 and we have currently taken out the high from the beginning of 2009, the situations are still close. What is different is that in December 2002, M2 was growing at 6.3% whereas currently M2 is only growing at 3.9% as you point out. The result in 2002 was a failure to “paint the tape”, another rally that failed and created a head and shoulders that, once it broke the neckline, saw a return to test the lows. Should this current rally fail over the next few weeks, we could also have a head and shoulders pattern with 875 as the neckline. I'm not a big believer in backtesting esoteric derivations of price, but the coincidence of the two major chart patterns and the actions of the Fed in both time periods should not be ignored.

I couldn't agree more, including the point that it generally doesn't make a lot of sense to backtest. What we have here are two very similar periods--except as "No Axe" points out money supply growth is even more anemic now.