February 13, 2009
The best that can be said of todays market is that at least the losses were far smaller than the four, near five, percent drop on Tuesday. While the NASDAQ was off by -.40 percent, the DJIA fell -1.04 percent and the S&P500 retreated -1.00 percent.
Looking at all days when similar closes occurred, and widening the range to include all losses between zero and -1.04 percent for the DJIA; between zero and - 1.00 percent for the S&P500, and between zero and -40 percent for the NASDAQ, we find the total comes to 754 out of the nearly 15,000 trading days since January 1950. Of these, 114 occurred in this century. The frequency is the same for both periods, about five percent
The striking peculiarity of these 114 closes is they most often took place when the market was rising. The diagram below, which plots only these 114 closes, illustrates this relationship. The first segment, between January 2000 and February 2003, when prices were in decline, has 16 dots indicating days when all indices fell, in todays range. The next period ends with the bull market of 2003; the diagram shows 90 such closes, while the final portion, which covers the decline from October 2007 to day, has 8 such days.
Of course, the visual evidence shows that this negative pattern occurs more often in rising, than in falling markets. Yet to emphasize this conclusion, here are the actual ratios: 16 of 723 days in period 1 translate to 2.2 percent and 8 of 322 days in period 3 is 3.5 percent. These ratios are much smaller than the 90 of 1186 days, or 7.6 percent, of these occurrences when values are in an uptrend.
DJIA -1.04 percent
NASDAQ -.40 percent
S&P500 -1.00 percent