October 28, 2008
The large increases today were close to the record boosts by the DJIA and the S&P500 set just two weeks ago, on Monday October 13. Indeed, these indices posted their second highest percentage advance today in more than 80 years; moreover, the NASDAQ scored its fourth highest gain ever, and the largest since April 2001.
Yet the recent market actions dictate a cautious outlook; they indicate a phase of major increases and substantial decreases. Rather than being on a roll, prices continue to seesaw. Remember that just two days after the record October 13 run up, prices had dropped almost as sharply on the following two days. The S&P500 lost more than it gained, while the other two indices held on to only a small portion of their advances.
As for the history of the trading day following these large gains, the NASDAQ rose only once, while it fell three times with those losses deeper than -1.9 percent. While the other two indices fared better, they nevertheless decreased as often as they increased. We sense that we are more on a rocking horse than on an escalator
DJIA 10.88 percent
NASDAQ 9.53 percent
S&P500 10.79 percent