The Volokh Conspiracy - SP 500 has second worst day since at least 1950.

Today's 8.8% decline in the SP 500 was the second worst day since at least 1950. Only the October 19, 1987 crash was worse (-20.5%).

Since 1950, there have been 9 days with at least a 5.5% drop in the SP 500.

On average, the day following a 5.5% DOWN day was UP 3.5%, the 2d day later was UP another 1.6%, and the third day was DOWN 0.4%. In the seven -5.5% days since September 1987, the pattern for the first three days after the drop was similar, though the 4th day after was UP 0.8% and the 5th day after was UP 0.5%.

As worrying as a huge DOWN day is, two days after a 5.5% DOWN day the SP 500 is on average 5.1% higher.

So why doesn't this analysis persuade me to go substantially long on Tuesday?: because emotionally I feel that this time it will be different. As it is, I moved back into the market at Monday's close just a fraction of what I took out of the market late last week.

	[Jim Lindgren, September 29, 2008 at 4:46pm] Trackbacks SP 500 has second worst day since at least 1950. Today's 8.8% decline in the SP 500 was the second worst day since at least 1950. Only the October 19, 1987 crash was worse (-20.5%). Since 1950, there have been 9 days with at least a 5.5% drop in the SP 500. On average, the day following a 5.5% DOWN day was UP 3.5%, the 2d day later was UP another 1.6%, and the third day was DOWN 0.4%. In the seven -5.5% days since September 1987, the pattern for the first three days after the drop was similar, though the 4th day after was UP 0.8% and the 5th day after was UP 0.5%. As worrying as a huge DOWN day is, two days after a 5.5% DOWN day the SP 500 is on average 5.1% higher. So why doesn't this analysis persuade me to go substantially long on Tuesday?: because emotionally I feel that this time it will be different. As it is, I moved back into the market at Monday's close just a fraction of what I took out of the market late last week.