Wow, lots of interesting responses from yesterday’s 300 Point Dow Gains? During Bear Markets ONLY. I appreciate those of you who actually do a little research, and sent in some form of analysis.
Of course, as many of you pointed out, a percentage measure would be much more credible than mere numbers. I thought Rosenberg was having a little fun with it. I suspect he was pushing back against the "300 point rally? Its a bull market!" meme circulating via the usual cheerleaders. Note that he has 10-15,000 retail brokers, and when that line circulates on Bubble TV, he likely gets a lot of internal email on it.
Let’s consider Bespoke’s Analysis on the subject: They note that average returns three months after all 300+ point moves has been 0.06%, with positive returns 50% of the time.
Buying the 1997 and 1998 300+ days made you money (if you held on long enough). But as my marked up version of their chart (below) shows, every subsequent 300+ day led to an eventual lower low.
DOW JONES 300+ POINT MOVES AND BEAR MARKETS
chart via Bespoke Investment Group
I sent the following questions to the Bespoke boys:
• What percentage of 300 point days had lower prices occur there after?
• What was the 300 point day to trough average percentage loss?
• How many days afterwards did the trough/low occur on average?
We’ll post their answers here later . . .
Other 300 Point Criticisms:
The 300-Point Bear Market Rally Thing
300-Point DOW Gains = Bear Market?
A Most Unfortunate Update
Bull Markets Don’t Rally 300 Points
300 Point Rallies are Characteristic of Bear Markets