Historic Drawdowns in market

The last two weeks steep downhill and loss of 10+ percent on S&P


The chart below shows calendar year S&P 500 returns without dividends (grey vertical bars).  Below the bars are red numbers which indicate the maximum intra-year drawdowns.  The chart makes clear that 10% drawdowns are fairly common.  What is not common is a drawdown of only 3% which was the case in 2017.

Another important observation from the above chart is that as long as the economy is not in a recession (areas shown with horizontal green bars), the calendar year returns are usually positive.  The U.S. is not currently in a recession.

From January 1950 through December 2017, the S&P 500 has declined by 5-10% 41 times.  The average length of the decline was one month.  The average recovery from the low was one month.  In the 11 cases that the S&P 500 declined by 10-20%, the sell-off lasted and average of 4 months and recovery took and average of 3 months.

Source : delta maker sentiment

Volatility and high frequency algorithms

Screen Shot 2018-02-07 at 3.14.26 PM

If it wasn’t obvious to investors,  fanned the market volatility. Treasury Secretary Steven Mnuchin said that algorithmic trading played a role in the sell-off as he sought to reassure jittery investors.

The S&P 500 fell as much as 9.7% from its peak. That’s practically the definition of a market correction, which is commonly understood to be a decline of at least 10%. The small-cap Russell 2000 did sink more than 10%. (IBD)

No, i am not talking about terminator 2 judgement day

yahoo has a small segment here

As posted in the previous post on this site we have had and we had exited the market on Jan 30th when we

5 days of stalling and no progress

2 days of high volume selling

100 points loss in 2 days in high volume

Top leaders down in high volume

( first photo source : trading view )

FFTY etf a proxy for top 50 beat stocks in the market down by 2%

On Jan 30th – the market gapped down 88 points …