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The Last Boomer
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I am not a professional investor. I am a quantitative consumer market researcher and analyst with an MBA degree. I got interested in the financial markets about three years ago and started reading voraciously books on finance and investing. I find some similarities between quantitative stock... More
  • The Week After 10% Gain 0 comments
    Oct 16, 2011 9:47 PM
    What happens to S&P 500 in the week after the index gains 10% or more in nine trading sessions?
    I looked at the last three years. Excluding the current drive, SPX has had 10 other instances since October 15, 2009 when it gained 10% or more in nine trading sessions. Six of them are part of the same rally that happened in March 2009. After the market hit the low of 676 on March 9, 2009, SPX rose 15% in seven trading sessions and then it rose an additional 2.5% in the next five trading days. 
    Two other instances took place in November 2008 and after them the index plunged -10% and -6% in the next week. Then there was another 13% rise that peaked in December 4, 2008 and in the next five sessions the market gained another 3%. 
    The next (and last) instance of such steep rise was between July 13 and July 23, 2009 when the index gained 11% in nine days and then an additional 1% in the next five days. 
    If we assume that October 2011 is more like March 2009 rather than November 2008, we should expect the market to slow down significantly but not crater in the next 5 trading days. It is likely to make some modest gains and consolidate. 

    Disclaimer: The opinions in this document are for informational and educational purposes only and should not be construed as a recommendation to buy or sell the stocks mentioned or to solicit transactions or clients. Past performance of the companies discussed may not continue and the companies may not achieve the earnings growth as predicted. The information in this document is believed to be accurate, but under no circumstances should a person act upon the information contained within. We do not recommend that anyone act upon any investment information without first consulting an investment advisor as to the suitability of such investments for his specific situation.
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