Down >3% 2 Days in a Row
February 25, 2020
Back-to-back Days Dow Down >3%
I know how Yogi Berra felt when he said, “It’s like déjà vu all over again.” While I thought this morning’s opening uptick was not likely to hold after yesterday’s steep 1,000+ point sell-off, I didn’t expect a 1,000+ point reversal today resulting in near back-to-back 1,000 point down days. Today was more than just the feeling of experiencing something experienced before, it really happened. The Dow (Dow Jones Industrial Average) lost more than 3% for the second day in a row. The tables below, for both the major U.S. indexes and foreign markets, show the declines.
Notice the green in the table above. The volatility index (VIX) aka, the “Fear Gauge”, jumped another 12% today. It has shot-up over 60% in the last two days. For an example of how volatile volatility can be, the VIX is up 100% since last Wednesday.
Global Markets
The near-2,000 point drop in the Dow over the last two days is beyond rare; it’s has never happened before. As you can see from the table below, greater than 3% back-to-back down days has not happened in recent history, either. It has, however, happened in the near 124 year history of the Dow. Think 1929 stock market crash. On Black Monday, October 28, the Dow fell 13% to 260.64. The next day was Black Tuesday. The Dow fell 12% to 230.07.
Today’s coronavirus induced stock shock was technically worse than yesterday. As the Dow chart below indicates, the Dow’s decline pierced a key price support level and fell on higher volume than yesterday’s drop. And, as I noted above, the market opened up, so today’s down draft represented a reversal day.
Coronavirus pandemic fears intensified as cases continues to spread outside of China. Austria confirmed its first two cases of the virus. The virus is quickly causing worries about the global economy to mount. As should be expected, oil has fallen to multi-year lows and gold is setting multi-year highs. Defense is now the best offense.
Hope this is helpful.
Thank you for your continued trust and confidence. I remain vigilant as I manage and oversee your investment account.
John