What the stock exchanges do after a daily collapse of over 5%

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Servicestatistics and markets

According to Bespoke, such strong declines have historically been followed by the rebound of Wall Street in the following session

by Vittorio Carlini

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According to Bespoke, such strong declines have historically been followed by the rebound of Wall Street in the following session

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A nice splash, no doubt about it. In yesterday’s session, Wall Street sold 5.89%. According to the investment company Bespoke, a similar collapse in a single session has occurred 28 times since 1952 in history. Of these falls, five have materialized in the past three months.

What history tells us
That said, again according to the institute, such marked drops have historically been followed by the rebound of the lists on the following day. Not only that: in the week and month to follow, in the majority of cases, there was a recovery.

Statistical data
On average, in the post-collapse session, the S&P 500 increased by 2.14% and raised its head in 81.48% of cases. In general, moreover, the longer the period of time considered, the greater the rebound. So the 500 largest capitalizations, in the following month, gained 18.9% and raised their heads 82.6% of the time. Will this happen again today? We’ll see. For now, the futures on the American markets are positive.

“Bear” or “Bull” market
That said, investors wonder: is the end of the rally? The operators don’t agree. Some point out that it is a pause for reflection. Keith Lerner, chief market strategist of SunTrust Advisory Services, says that “after a 40% rebound from the March lows, the stocks are” pulled “upwards”, and it is therefore normal that “they are vulnerable to bad news”. By contrast, John Hussman of Hussman Investment has a pessimistic view of the whole issue. “In the face of the incredible” fracture “between Wall Street and Main street”, based largely on the wager of the continuous donation of “free money” by the Central Banks, “it is likely that we will have to face a crisis that will appear gradually but sudden. Medium advised investor….



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