Just wondering if anyone knows when the last 2% (or more) down day for the S&P 500 was? I'm interested in comparing the current market environment to that of late 2006 and early 2007. If I recall correctly, before the plunge in late February 2007, it was many months since the S&P 500 had declined by 2% or more in one day.
Actually, from late 2003 until Feb. 2007 there were very few -2% days. There might have been one in the summer of '06 and in a few of the other modest corrections, but not many. There was also a period like that in the early 90s. During both periods, the S&P didn't experience an overall 10% drawdown for over 5 years. However, the macro picture is very different now (currency wars looming, gold hitting new all-time highs almost every week, housing/employment still very dismal in U.S., etc.). I wouldn't expect low-volatility for too much longer
I agree that the environment now is different. In my mind I can describe financial markets as this: "free markets wanting to go "risk-off" due to European sovereign debt concerns and US consumers and businesses deleveraging. BUT "don't ignore world governments (particularly US Government and Federal Reserve) providing fiscal and monetary stimulus, in order to promote "risk-on" behaviour." So it's an ongoing fight between the two. In the first few days after QE2, risk-on had the upper hand. However 'risk-off' seems to be getting stronger this week. If risk-on prevails, then it could still be a long time until there is a 2% down day for the S&P 500. But if risk-off prevails, then there could be a 2% down day today or early next week.
Why do you think there will be a correction coming ? I feel you sense there is something wrong with the market as well. The way the market has open and close since Nov. 5th has been strange. The most is the rallying from the bond buying and there is nothing special. There should be a little correction at the end of the year before the bull market takes off in 2011.
Correct, at the very least it looks like a fun rollercoaster today. Especially when Merkel raises the possibility of haircuts for holders of Irish bonds.
Prior Drops of 2% or more on the S&P in last year: Code: 8/11/2010 2.7% 7/16/2010 2.8% 6/29/2010 3.1% 6/4/2010 3.5% 5/20/2010 3.8% 5/6/2010 3.3% 5/4/2010 2.4% 4/27/2010 2.4% 2/4/2010 3.1% 1/22/2010 2.2% 1/21/2010 1.9% (nearly) Not too few for a normal year.
Thank you for that information neke, very much appreciated. While I agree that there have been more than few, the big thing is that there haven't been any since 11 August. And with a big Bernanke put in place, it's possible that there mightn't be any for a while yet.