From down 326.38 points at the low, to closing up 298.98, yesterday was one of the biggest Dow point swings in history.
But where does it rank overall?
Paul takes a romp thru the data, going back to 1931, and gives us some good insights:
• This was the 2nd biggest point snapback rally in terms of points;
• In percentage terms, yesterday did not even make the top 10 — it was #30!
Paul adds that following these intra-day reversals, markets over the next day, week, month, or quarter were, on average, up marginally, but "nothing to write home about."
Top 10 Intraday Dow Point Swings:
Top 10 Intraday Dow Percentage Swings:
Good stuff, Paul.
I’m also waiting to see what the boys at the Bespoke Group come up with — this is the sort of stuff they love to sink their teeth into. If we can see the same studies for the Nasdaq and SPX, we’ll really be onto something . . .
I think it is hilarious to think that Ben Bernanke made an historic intermeeting cut of phenomenal proportions because a “rogue trader” at Soc Gen crumped. That is rich!
I don’t even believe the rogue trader bit…is this the new excuse for these greedy fools
Oh, and the European Central Banks knew about it (hence their refusal to cut)–did they even tell him?
Excellent presentation Barringo.
The message is clear… The swings yesterday don’t even get on radar historically when examined the only way they can be ranked… by relative percentage.
ECB is the little pig in the brick house giving us the finger. “Sorry, not enough room little bro!” We are going to get eaten by he wolf.
Looks like the prisoner’s dilemma and we are going to be the prisoner getting the shaft.
Yesterday marked the sixth largest intraday reversal in the S&P 500 since 1982. The two closest, #5 and #7 (in 2001 and 1998), went on to put up next-month performance of +12% and +18% respectively
Massive rallys are characteristic of Bear markets. Yesterdays record breaking rally reinforces my belief that we are in the early stages of a decline in share prices. Looking at those dates I believe most of these rallies occured during bear markets.
I was an analyst for a long only mutual fund during summer of 2002. I remember July of 2002 as the most difficult time I have ever experience in the market.
Interesting volatility comparisons. What would also be interesting is the $ market cap those swings represent and an economic impact of the volatility. The difficulty in comparing 1929 to now to “articulate” a real understanding of scale is there are a myriad of factors that differ such as ease of money flow, background normal weekly volatility, % market cap loss to overall economy, and the economic importance of % drops in equity markets to the broader economy. Does a 10% drop in 1930 equate in economic impact to a 10% drop now and where would equilibrium be?
anybody notice the bespoke boys charts..
except for july 1997, where there was no more dip, the other three times, we had another big dip than the intraday reversal bottom.
so i guess i will wait for one more bottoms-up before thinking about more long than short positions.
What’s with the revisionist history? Yesterday, while I was eating lunch and watching the crawl and flash cards on some cable news channel, I saw the low go to 357 (an easy number for me to remember) and then 380-something before it started pulling up.
Vermont Trader I hear you on the tough July ’02. Equities looked so cheap at the time. It was a hard hold for me until October ’02, but 2003 made it worth the pain in spades.
I am not going to fight the fed in this market. IMO this is not a valuation bubble market.
Okay, before yesterday, the sky was falling, and the great wash-out had begun. Now today, after the nice 600+ point bounce in the Dow, in the immortal words of Gilda Radner…”oh, nevermind”.
KK..
yes, its not a valuation bubble, but definitely its not a valuation paradise, where buyers can consider stocks as assets worth something, unlike the current 40%+- value they change in couple of weeks.
i prefer to stay out of this crazy market right now, and will buy only when they get knocked down to their real worth, that even insiders will like to buy their own stocks.
I may be wrong in my nitpicking but I would have thought that intra-day swings would be defined as |low to high| instead of |low to close|.
Using the |low to high| definition, yesterday’s swing was 809 (low of 11530 to high of 12339), the swing on 7/24/02 is 754 (low of 7489 to high of 8243), and the swing on 1/2/01 is 845 (low of 10367 to high of 11213) which would reverse the ranking order of the first three in the table.
It’s my day to nitpick. Doesn’t matter if I’m right or wrong or have a point.
1st: would like to see the #30 rank in percent chart since we are talking about it – I might try to figure it out myself
2nd: Top 10 Intraday Dow Percentage Swings chart like to see it like our charting of hurricanes in the last decade ie – number of wild swings in a time frame say 2 years – ie 4 events in and around 1929
Thanks for highlighting Paul’s post. I took a look at the S&P 500 from 1950 to yesterday’s close. Yesterday was the biggest point swing in that period. It was 7th largest in percentage swings. For the Nasdaq Composite going back to 1971, it was the 27th largest in point swings and 19th largest in percentage swings.
I posted the spreadsheet and chart on my blog:
http://financialsight.blogspot.com/2008/01/bouncebacks-after-gap-downs.html
It’s very hard to get it wrong if u can pick up INTC at 18ish, GOOG at 520ish and AAPL at 125ish.I mean we are just talking about a mild recession at worst, slowdown at best.
It’s very hard to get it wrong if u can pick up INTC at 18ish, GOOG at 520ish and AAPL at 125ish.I mean we are just talking about a mild recession at worst, slowdown at best.
Reality check folks, time for a reality check:
No crash anytime soon.
No correction anytime soon.
Facts:
-Microsoft reported strong earnings and provided a strong outlook for 2008. If you’re short technology, you may want to cover.
-Ebay provided a weak outlook for 2008 and still didn’t tank, had this happened last week, EBAY would be at $15 by now.
-Financials, homebuilders, retailers going up with bad news, don’t be surprised if retailers report weak sales and still go up the same day.
-‘Ben Dover’ Bernanke will cut rates next week anywhere from 50 to 75bps. You bet the market will rally again.
-Bad economic data is not having the same effect on the markets, priced in or not, who cares, either you’re making money or you’re not.
Once again it comes down to irrational buying followed by irrational selling and the cycle keeps going. Even if we crash one day next week, big deal, Bernanke will cut rates and up we go.
Those charts don’t mean anything right now, I’ll save you some time, the market will correct again, check back after we cross 13,000 for the DOW.
Suge
I love this info-porn. That’s why I have my traders almanac. The thing I gleen from these two tables is this: The wild point and percentage swings seem to congregate near the beginning and near the end of that bad periods. And bad periods seem to have MULTIPLE entries. If we are in a “bad period”, and this is the first to register on the points table, then we must still be towards the beginning, not the end…