With only one positive close in the past six trading days, the consensus of outlooks has shifted to pessimistic. Of course the news coming from Europe – first the impending defaults and then proposals for an international tax to assert responsibility and to show support for countries which have spent themselves into near bankruptcy helped to spread gloom and increase uncertainty.
Todays S&P500 loss of -3.90 percent is its 39th worst single session decline since 1950. Similarly, The DJIA fell 3.60 percent, becoming the 49th deepest one day decline. The NASDAQ, however, which fell -4.11 percent, came in as the 79th steepest but that ranking reflects the shambles of its go-go years.
Leaving the fundamentals, and considering only the history of numerical changes, brings some balance into view. The diagram shows the level of the S&P500 on the 49 days that all three indices recorded three losses in a row.
While the frequency of this combination seems greater in the two rising periods, their incidence, as a proportion of all trading days, is somewhat lower than their occurrence in falling markets. Yet these numbers provide little breathing space between bull and bear markets.
The 2.03 percent in the earlier upswing, and even the 2.26 percent of the later one, seem not very different, statistically, from the 1.82 percent of the 2007/2009 decline, or from the 1.99 percent rate since March 2009.
Nevertheless, for purpose of scoping the future, these results indicate that losses this large, and this frequent, are not always, and need not be, associated with falling stock prices.
DJIA -3.60 percent
NASDAQ -4.11 percent
S&P500 -3.90 percent