Yesterday, we saw the S&P 500 close down 1.6%. This marks the 20th time this year that the index has declined by 1% or more in a single day.
Here’s the table:
Let's break down what the table shows:
The first column represents the year, while each subsequent column indicates the number of large down days for that year, ranging by declines of 1%, 2%, and 3% or more and total count.
The Takeaway: That’s the 20th time this year it has fallen by 1% or more in a single day.
It sounds like a lot, but it’s not unusual. Since 1950, the average year has about 25 of these moves. So we’re still below that.
Still, 20 is a good point to pause and ask: Is this normal volatility, or something more?
If there were real fear, we’d likely see huge spikes in the VIX or credit spreads. So far, we haven’t.
Volatility is part of any market, even in strong years. But price tells the story. A few isolated drops don’t mean much. A cluster of them might.
If we start seeing five or six of these in a short time, that could signal a shift in trend.
So what should traders do? Watch support levels. Pay attention to how stocks react around those spots. And don’t overreact to one red day.
This may be noise. Or it may be the start of something more. We’ll know soon enough.
Grant Hawkridge | Chief Aussie Operator, All Star Charts
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