Daily Speculations

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The Chairman
Victor Niederhoffer

03/13/2005
After the 20-Plus Point Decline, Then What?

Yes, the vigilantes are having a field day with all the negatives again after a down week. That is always the case when a week of down more than 20 points or 2% in the S&P 500 occurs.

Rather than joining with them in exacerbating positions against the drift I often have been known to take a position apart from their pessimism. And it's always good to count such meetings of David and Goliath, viz:

S&P Performance in Weeks After Declines of More than 20 Points (Friday to Friday Changes)
Week of Decline Change That Week Next Week 2 Weeks Later 3 Weeks Later
3/11/05 -23 ? ? ?
1/11/05 -27 -2 -15 6
8/16/04 -39 2 33 10
4/30/04 -34 -7 -2 -2
3/12/04 -40 -13 -1 -38
9/26/04 -39 34 12 -5
3/28/03 -30 15 -10 23
2/17/03 -24 6 -10 -6
1/24/03 -43 -6 -24 6
1/17/03 -23 -43 -6 -24

Note that there have been about four declines of 20 or more a year since year-end 2002. In 2000, 2001 and 2002, there were some 20 declines of 20 or more each year. You be the judge.