Thursday, January 8, 2009

How The Market Has Reacted To 2.5% - 5% Drops During The Bear

The SPX closed lower by 3% today. I’ve looked at drops of 5% or more in depth in the last few months and found there to be a tendency for a short-term bounce following such steep drops. Tonight I decided to see how drops between 2.5% and 5% have fared since the beginning of the bear market.

In these cases further downside was more common. 84% of instances closed below the trigger price at some point in the next 3 days.


W said...

I`ve taken a look at SP declines much like you have done here, except I`ve divided them into several subgroups. Seems like our conclusions are similar.

Rob Hanna said...

Thanks Wangas. Good stuff.