Stats Never Seen Before

I’m a chart and stat junkie.  Here’s a few for you:

The percentage of stocks above their 200-day moving average:  4.78%
The percentage of stocks above their 40-day moving average:  2.26%
The percentage of stocks above their 10-day moving average:  <1%

I have never seen this type of panic and selling in my lifetime as a professional.  Certainly the 1987 crash was more dramatic because it happened mostly in one day.  But, this torturing sell off where you wake up and say to yourself, “I can’t sell after a 500 point down day because surely it’ll rally”.  Then, we get another 500 point down day the next day.  It’s like twisting the knife in more and more every day. 

But, it’s beginning to feel like a coiled spring and I think it is.  But, I’m not buying the dips yet.  I’m selling the rallies (can’t remember the last one) and averaging out the few positions I have left when it doesn’t rally.

Even though we’re seeing a lot of statistics and things in this bear market that have never happened before, the feeling is the same as 1987, 1998, 2000-2003.  Wake up and the futures are down.  Come home from work and the market is down.  Wake up and the futures are down.  Come home from work and the market is down.  When will it end?  In trying to answer that question, I started looking back in the previous bear market at the beginning of this decade.  2002 was a real nasty year so I made a picture of the spring of 2002 through the summer 2002 compared to May 15th, 2008 through today.  See below.

My only point in showing this is to show you that there have been these types of violent selloffs before.  The harder they fall, the harder they bounce.  If you can afford to keep some in the game or you’re very quick, you will make money soon from a rally.  That rally (white line) in the summer of 2002 was almost a 22% rally from trough to peak.  Now, it failed eventually.  But, the point is there was opportunity to sell at higher prices and an opportunity to short into rallies.  We’re getting closer.

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2 Responses to “Stats Never Seen Before”


  1. 1 Matt October 9, 2008 at 9:18 pm

    Karl,

    Thanks for your thoughts.

    The action lately looks like mutual fund redemption because the market seems constructive during the day and then just falls apart the last hour. I think it is mutual funds pulling cash for their clients.

  2. 2 keggerss October 10, 2008 at 6:20 am

    I completely agree. You can feel that pressure. Not rational.


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