Monday, September 29, 2008

Recap of a big day

The S&P 500 index fell 8.8% today. The Dow 30 index (which has a longer track record) fell 8% or more only eight other times in the last 80 years: twice in the 1987 crash, three times in the 1929 crash, and three times in the great depression that followed. The market rose on the next day in six out of those eight cases, but obviously that's little consolation in the long run.

By the way, financials fell 10.7% today despite the ban on short selling. Go figure!

One sentiment indicator reached an all-time record level of panic today, and volume was actually less than it was on three other down days this month, so there are signs that the bear market will pause to take a breath soon.


Anonymous said...

For better or worse - I sold my long-term PUT options about one hour before the close - for a profit.

I was concerned that the "bailout" vote(although "defeated"), was still open and could have been passed in that last hour. If so, the 777 pt drop could have turned into a huge rise for the day. I took the sure money, and like you, will wait for the next opportunity.

The next bailout bill voting (Thursday), might get mixed in with the renewal of short-selling. That could be an incredibly volatile combination - one that I will avoid.


Jody said...

Looks like you made a good "call."