Today people got tired of selling Facebook. That’s all.
If you want to hear some deeper thoughts about last week and today, Ivan and I did a 17 minute ‘Momentum Monday’. We try and look smart while going through our lists to see what’s working and what could work next.
As I wrote last week, ‘there will be bounces‘ and today we got a doozie.
Michael has a great post on this market moment.
The S&P 500 gained 2.7%, it’s best day since August 2015. It’s nice to see some green after a lot of red last week, but big up days don’t usually occur in healthy markets. Going back to 1970, 74% of the +2.5% days happened under the 200-day moving average. 76% of them happened when the market was already in a 10% drawdown. In other words, the best days tend to be snap backs like we saw today.
Buying panics are pretty rare. You typically don’t see big up days in healthy markets because buyers don’t capitulate all at once the way that sellers do. Of the 169 different +2.5% days since 1970, only five occurred within 1% of an all-time high: November 1980, February 1991, August 1991, February 1999, and March 21 2000 (three days before the top).
I hope the market never looks back but I would be surprised as hell.
It’s not easy being a blind squirrel watching other blind squirrels.
Also published on Medium.