Sharp Rise Follows Three Declines

March 11, 2008

The NASDAQ, gaining almost 4 percent led today’s impressive market advance. The two other indices were close behind, as the S&P500 rose 3.71 percent and the DJIA wound up 3.55 percent higher for the day.

Such a welcome turnaround, after three straight declines for all indices, occurred only 16 times before today, but not with these strong results; the median rise of those earlier increases was about 1.15 percent.

Moreover, daily increases above three percent are rare, with some 17 closes of that size since January 2000. Ten of those shared the major market decline of 2000 to 2002; while the other seven occurred during the early stages of the last upswing, between the middle of 2002 and early 2003. There have not been any greater than three percent increases since March 2003.

It is significant, that in the past, these triple index larger than three percent gains, occurred when the market was falling, or reversing a long decline.

Another feature of today’s gains, is that these occurred after all three indices declined for three successive sessions. And today the Fed took a meaningful step to increase the financial markets’ liquidity.

This is similar to the actions of January 22: then the Fed cut its funds rate by 75 basis points, as the market was slipping for the fifth day in a row.

DJIA 3.55 percent
NASDAQ 3.98 percent
S&P500 3.71 percent

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