Following kpyang's excellent posting on the bearish Dow on Jul 01, the Dow market plunged a day after on Jul 02 entering into what the market coined as the 'Bear Market', a term used when the price has fallen more than 20% from its previous record high which was achieved on Oct 9 2007. It went on to set the tone for the all important employment release the following day for Jul 03 which was brought forward because of the US holiday.

Since 1900, whenever the Dow enetered into a Bear Market, it has on average dropped by 30% and lasted over a year. If you are interested in equity and what the bear market implies, Ned Davis Research's "The Stock Traders Almanac 2008" has an interesting recap of the last 10 Dow Bears which I summarised it here.

Mar 19 2002 - Oct 9 2002
Dow lost 31.5% in 204 days
Trigger: Worldcom and Enron

Jan 14 2000 - Sept 21 2001
Dow lost 29.7% in 616 days
Trigger: Bursting of dot-com bubbles.

Jun 17 1998 - Aug 31 1998
Dow lost 19.3% in 45 days
Trigger: Collapse of LTCM

Jun 17  1990 - Oct 11 1990
Dow lost 21.2% and lasted 86 days
Trigger: Invasion of Kuwait

Aug 25 1987 - Oct 19 1987
Dow lost 36.1% in 55 days
Trigger: Currency valuations debate between US and Germany

Nov 29 1983 - July 24 19874
Dow lost 15.6% in 238 days
Trigger: Inflation fear.

Apr 27 1981 - Aug 12 1982
Dow lost 24.1% in 472 days
Trigger: Excessive interest rates

Sept 8 1978 - Apr 21 1980
Dow lost 26.9% in 591 days
Trigger: Stagflation

Sept 21 1976 - Feb 28 1978
Dow lost 26.9% in 525 days
Trigger: Stagflation again

Jan 11 1973 - Dec 6 1974
Dow lost 45.1% in 694 days
Trigger: Watergate scandal and trhe Arab-Israel war.

I supposed that brings back alot of memories for those who have been in the market for many years. Notice that recent bear markets tend to recover faster than older ones. International linkages and dynamism with other non-equity markets offer more avenues for equity to recover from major Bears as compared to the older days. Also, notice that most Bears were caused by inflation resulted primarily from runaway oil prices which were very similar to what we are witnessing now. The oil plays and credit situation should continue to be the drivers for the quity market in the short term ahead.