Yesterday's Reversal: Expect More Volatility Today

Mar.15.07 | About: SPDR S&P (SPY)

Yesterday's positive reversal day helped make what was shaping up to be a bad day into a good one. We looked back at prior reversal days to see what we can expect today.

Since 1994, there have been 87 other similar reversals (where the market trades down at least one percent and goes on to finish the day in positive territory). On average, the S&P 500 trades down 23 basis points the next day, with negative returns in 53 out of 87 occurrences (61%).

Don't let the small number fool you though. More often than not, we experience a fair degree of volatility the next day. In over half the occurrences, the market moved more than 1% (up or down). Hang on to that Benadryl!

market volatility