Crazy market moves all day this week… Art Cashin puts it into perspective.
Media pundits were pounding on the fact that yesterday marked the first time in history that the Dow Jones average moved 400 or more points on four consecutive days.
While that’s technically true, we need to recall that for the first 53 years of its existence, the Dow hadn’t reached 400, making 400 point swings almost impossible to achieve.
Jason Goepfert, over at SentimenTrader, applied a somewhat more appropriate filter – 4% rather than 400 points. Here’s a bit of what he wrote:
Summary: The violent see-saw continued with another day of 4% moves in many stocks.
Going all the way back to 1897, this is only the sixth distinct time the S&P 500 or DJIA swung at least 4% for four straight days.
The others were 10/31/29, 9/15/32, 4/22/33, 10/21/87 and 11/24/08. Market performance after those instances was erratic during the next few days and months. A year later the market was positive by at least +29% three times, +7% once and -12% the other.
So, we see that such moves are quite rare and tend to occur in periods of high market volatility (Duh!). Unfortunately, they tell us little about short-term impact and follow-through.