Was Monday's Big Sell-Off a Bullish Indicator?

If past is precedent, Monday's massive sell-off could actually be bullish for the S&P 500 Index (SPX)

by Karee Venema

Published on Jun 30, 2015 at 9:44 AM

The market took a beating on Monday, with the S&P 500 Index (SPX) shedding 2.1%. According to Schaeffer's Senior Quantitative Analyst Rocky White, the SPX has notched a single-day deficit of 2% or more only nine other times going back to 2012. While the next-day returns were mixed -- ranging from a loss of 1.2% in November 2012 and October 2014 to a gain of 1.4% in April 2013, the one-month returns were actually quite bullish. In fact, looking out one month past this rare occurrence, the S&P 500 was positive each of the previous nine times.

150630spx1

Widening the scope to compare this to anytime returns for the S&P 500 Index echoes the idea that Monday's massive sell-off could be positive for the benchmark down the road. While the SPX averages a next-day anytime return of 0.1% versus a next-day loss of 0.1% following a 2% plunge, the rest of the time frames favor the latter. In fact, the SPX averages a one-month return of 4.8% following a 2% drop, and is positive 100% of the time. The one-month anytime returns for the SPX are a slimmer 1.2%, and the index is positive just 69% of the time. Today, the S&P 500 is paring a portion of yesterday's big losses in early trading, on speculation of a last-minute Greek debt deal.

150630spx2


A Schaeffer's exclusive!

The Expert's Guide

Access your FREE trading earning announcements before it's too late!


 
 

Partnercenter


NEW! Explore Schaeffer’s Partners' deals and get connected to top online brokerages with deals tailored exclusively for our readers.  Get answers to your questions regarding transfer fees, commission rates, programs and available discounts related to online trading services.

MORE | MARKETstories


Look Who's Going Bankrupt Next in America
Porter Stansberry is making a concerning prediction.
CE Stock Heading into Bullish Month
Celanese stock is coming off a free fall from its all-time-high in late 2019
HD Stock Sinks on Bear Notes, In-Store Changes
Home Depot stock received price target cuts after sharing in-store changes
Look Who's Going Bankrupt Next in America
Porter Stansberry is making a concerning prediction.