Next in our series on the price-volume relationship in our Four Bad Bears lineup is the 1973-1974 Oil Crisis. During this 21-month period, the S&P 500 lost nearly half its value — a market meltdown triggered in large part by the Oil Embargo and exacerbated by a 16-month recession and the onset of nearly a decade of elevated inflation.

The 1929 Dow Crash had a clear pattern of decreasing capitulation volume spikes with seller exhaustion — an absence of volume — at the bottom. In contrast, volume throughout the 1973-1974 bear was rather unremarkable.

The year 1973 followed a fairly typical seasonal pattern with reduced volume during the summer (aside from a summer rally) and increased volume during the last quarter. The sharp selloff from April to October of the following year saw only a minor uptick in volume near the bottom. Volume did not increase significantly until the bull-market rally accelerated in February 1975, a few weeks after the successful retest of the low in January.

Thus, it appears that neither the 1929 Dow Crash nor the 1973 Oil Crisis was characterized by capitulation selling at the low — a phenomenon many investors expect at market bottoms. Otherwise, in terms of the price-volume relationship, there was little similarity between the 1929 Dow Crash and the 1973 Oil Crisis.

Check back in another day or two for a look at the price-volume relationship during the 2000-2002 Tech Crash.