January 21, 2009
The indices soared more than 4 percent, almost regaining all of yesterdays losses. Market history does not have many whipsaws as large as yesterdays drop and todays jump. In fact, only six such twin days exist; and all happened before 1962.
The good news is that most of these came just before the reversal of a long down turn and the following recovery. Indeed, three occurred just months ago, starting in the middle of October and lasting to the third week of November. While prices did not start rising, they did stop their sharp decline.
In 1962, after the two day reversal on May 29, the market recovery started barely a month later, on June 26. There is just one occasion, in 1997; when the market was already rising, and the boomerang seems not to have any impact on the price trend.
While such a projection may not be realized soon, nevertheless, past patterns place an optimistic spin on this pattern.
DJIA 4.35 percent
NASDAQ 4.60 percent
S&P500 4.35 percent