Prices scored their largest one day advance since August 2011, more than 345 trading days ago. This move on the heels of the increases of the last 2012 session on Monday will surely spread anticipations of further growth.
Yet gains of this magnitude occur more often with declining prices! Even those previous, large gains of August 2011 happened at the end of a significant correction. The market needed several months to regain the ground lost in the weeks before. It wasnt until well into the following year that prices returned to, and passed, their pre-correction levels.
Be aware of the large range of price movements when asset values change to this extent. The NASDAQ daily change fluctuated from a low of -3.9 percent to a high of 7.2 percent over the 19 closes in this range during the 2000/2003 downturn; and between minus five percent and plus six percent over the 24 occasions in the 2007/2009 decline. Even in this expansion, since 2009, NASDAQ closes extended from -4.1 percent to plus 2.0 percent.
Finally, a long range perspective: daily changes this large pair with bear markets. These accounted for 6.8 percent of all trading days in the 2007/2009 decline and 2.6 percent during the earlier 2000/2003 drop.
In contrast, only 1.6 percent of the sessions since the 2009 bottom scored these large advances while the share during the 2003/2007 bull market was even smaller: just .3 percent.
DJIA 2.35 percent
NASDAQ 3.07 percent
S&P500 2.54 percent
