300 Point Rally follow up

Thursday, August 07, 2008 | 06:58 AM

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.




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   

Thursday, August 07, 2008 | 06:58 AM | Permalink | Comments (21) | TrackBack (1)
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» 300 Point Rallies: Final Point from The Big Picture
One final note on our prior discussions of 300 point rallies: The first firm to make note of this (as far as I can tell) was a study by Lowry’s Reports. They discovered that during the 2000-2003 bear market, there were sixteen three hundred-point up da... [Read More]

Tracked on Aug 15, 2008 11:41:48 AM


Barry...several days ago I posted the quote below from Crooks & Liars and your system kicked it out. But I'm posting it again because it's important thant all these analysts start being held accountable for all their prognostications. These people just babble on and on without anyone ever calling them out, in the open media I mean. So here goes and hopefully this time the system does not kick it out.

this post with Michael Hanlon in mind: C&L’s Accountability for the Punditocracy Proposal

Here’s a few things the networks can do to clean up their act.

1) Set up an Ombudsman with a staff for each network that isn’t an employee of their corporation and have a weekly segment devoted to policing the media. They will also be available to take complaints reported by individual citizens and investigate them thoroughly.

2) Replay clips of each pundit when they’ve been proven wrong and let them explain their positions and why they thought they were right and ask them how they will correct their mistakes in the future.

3) Keep track of their infractions and set up a benchmark, like a 3 strikes your out rule for pundits. When they hit the benchmark, suspend them for a period of time so they can reflect on their mistakes.

4) When they return to work, ask them why they should be believed in the future.

5) It would be nice if they stopped using pundits that we know have been wrong over and over again.

Posted by: grumpyoldvet | Aug 7, 2008 8:02:12 AM

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