Though prices dropped more than two percent, resulting in the market’s 307th worst day in 70 years, this need not signal the end of this bull market.
While losses this deep occurred 144 times since 1996, some 60 happened during bull markets.
Prices recovered on the following day twice as often as they declined. Yet the next day’s median losses were significantly larger than the median gains.
There is no clear indication that this sharp reversal signals the end of the current bull market. Now at 1,227 days since it began in March 2009, it is vulnerable simply because it is the longest upturn in modern times. Today’s diagram shows only a few of these sharp drops happening before the end of the last two bull markets. Indeed, they occur most often when prices are turning higher.
Nevertheless, the diagram reveals that such losses have happened in all of the four setbacks of the current expansion.
DJIA -1.96 percent
NASDAQ -2.15 percent
S&P500 -2.09 percent
