November 7, 2008
Fridays strong ending pushed the S&P500 2.89 percent higher; the DJIA increased 2.85 percent and the NASDAQ 2.41 percent. Yet this brief rally failed to offset Wednesday and Thursdays deep losses. Thus, the indices closed lower than last Friday.
Focus on the pattern of the past three days, moreover, creates more doubt than confidence in a near term recovery. The NASDAQ, for an example, closed up 2.41 percent today, after falling -4.34 percent yesterday and -5.53 percent on Wednesday. Consider the history of two such closings: in 1987 and 2001. The NASDAQ, as well as the DJIA and the S&P500, were in lengthy declines. In 1987, the drop continued for another 45 trading days, before the market recovered its growth path.
The 2001 experience is no different, but the ultimate upturn took longer, requiring another 150 trading days. Yet that was not the end of that price decline: it took another year before the market .returned to its upward growth trend.
DJIA 2.85 percent
NASDAQ 2.41 percent
S&P500 2.89 percent