Volatile Price Action This Week Is Unusual & Not Necessarily Bullish
Volatile Price Action This Week Is Unusual & Not Necessarily Bullish
Big Down Day Followed By Even Bigger Up Day
The S&P 500 (SPX) (SPY) fell 1.51% Tuesday, but it followed up that big loss with a gain of 1.75% on Wednesday. Over the two-day period, the S&P is up about 4 points.
Big down days followed by even bigger up days have been rare during the current bull market that began on March 9th, 2009. In fact, situations like the last two days where the S&P fell more than 1.5% only to rally back even more the next day have only occurred six other times, and we highlight them in the table below.
You may think it's bullish to see an upside day that eclipses extreme losses on the day prior, but that hasn't been the case during this bull market. As shown, the S&P has averaged declines going forward in the near term (over the next day, week and month).
The last time this happened was on October 18th, 2011, when the S&P rallied 2.04% after falling 1.94% the day before. On October 19th, 2011, the S&P fell 1.26%. Over the next week the S&P saw a small 30 basis point gain, but over the next month, the index was down 75 basis points.
Courtesy of bespokeinvest.com