Volatility ReAwakens

Thursday, March 01, 2007 | 04:23 PM

Here's an excerpt from today's market commentary regarding prior one day high percentage sell offs:

Tuesday’s 400 plus point drop was a wake up call. Let’s take a look at the most recent periods of major 3%+ sell offs, to see what the markets did subsequently.

Note that single variable comparisons are rarely valid; we prefer to control for multiple factors rather than looking for just one single element as being determinative of what the markets are likely to do in the future. Note also that these three periods were part of the secular Bull Market of 1982-2000, and also reflect the final bubble expansion of the NASDAQ. However, we thought readers might find these studies of 1997, 1998 and 2000 as somewhat instructive:

1997 Market (Thai Baht / Asian Contagion)1997_asian_contagion

1998 Market (LTCM)

2000 Market (Tech and Telecom Peak)

Thursday, March 01, 2007 | 04:23 PM | Permalink | Comments (17) | TrackBack (0)
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I strongly suggest checking out Tickersense's post on 3% corrections...fascinating!

Posted by: Fred | Mar 1, 2007 4:58:03 PM

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