February 22 and 23, 2011 Prices Drop to February 4th Level
Following Mondays holiday, the market sliced prices so severely in two days, that they lost all that had been gained in the past 13 sessions. It seems quite proper to lay the cause squarely to the impending changes in the fundamentals caused by the unrest in the Middle East and its impact on oil supplies and prices.
Nevertheless, remember that last Friday all three indices moved up for the third day in a row. With the record showing prices increasing for a fourth straight day only 16 times over the past 12 years, expectations of a further, immediate gain rested on less than solid evidence.
Furthermore, the size of the losses suffered over the past two days -2.65 percent for the S&P500, happened on 68 other days since 2000. In addition, on the day after that is, tomorrow- prices recovered almost as often as they fell. That ratio is 37 gains to 31 declines.
Finally, while many of these large two-day declines coincide with the 2000-2003 bear market, the current recovery, which started in March 2009, has experienced almost that same number.
DJIA - .88 percent
NASDAQ -1.21 percent
S&P500 -.61 percent