Bear markets differ from each other in terms of size, shape and speed of decline. But some fluctuations within an individual bear market are remarkably similar.

And these repetitive trends can provide knowledgeable investors with a useful trading advantage. Unfortunately, lessons learned from one downturn do not carry over to the next. So anyone searching for repetition must confine the research to a single downturn rather than grouping data from different bear markets.

We saw a good example of pattern repetition in the bear market of 2000-3.

By my count, the FTSE-100 enjoyed six separate up-legs during this painful three-year decline. Each was quite similar in size. Shares rose by 15 per cent, on average, before investors lost heart and retreated.  Five of the six advances were very close to average. The sole exception was in the atypical period surrounding the World Trade Centre attack. Shares bounced up by 21 per cent near the year-end following a massive third-quarter sell-off.

Some investors choose not to trust trends like this because of the small number of observations. My own view is different. If faced with the choice of ignoring a trend because of insufficient evidence, or integrating a meagre amount of information into my trading decision, I would select the second option every time.

The bear market of 2007-8 appears to be developing its own points of similarity.

Recall that the UK stock market peaked in mid-June of last year and then made an unsuccessful attempt to rally above the June high one month later. Shares have been trending down ever since. There were four separate down-legs in the last nine months. The average drop was 12 per cent. 

We all know that averages can disguise huge differences between individual data points. But not this time. All four declines were close to average, ranging from nine to 15 per cent.

Trends like this one are not precise market-timing tools. Even so, they might provide short-term traders with the courage to “hang tough” in the face of unexpected day-to-day price fluctuations, or keep optimists from jumping back into shares too soon.

A second unique aspect of the current bear market is that all four dips to date were short and sweet, requiring just three to six weeks to run their course. This steady pattern of fast double-digit declines is obviously linked to investor uncertainty. Economic problems were initially limited to over-priced housing. They suddenly spread to sub-prime loans and then to a wider range of investment instruments. Everyone waits for the next shoe to fall . . .

On a broader note, recession now looms and some investors worry about prospects for rising inflation down the road. The biggest worry of all is that no-one knows if the Federal Reserve’s valiant fight to contain this crisis will be successful.

My own view is that the array of economic and psychological problems that have spooked investors since mid-2007 will continue. There are too many unexploded bombs out there.  For this reason, I expect my 12 per cent rule of thumb to hold good.

David Schwartz is an active trader and a stock market historian. Send any comments or suggestions to tradersdiary@ft.com