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The following chart was published on July 12, 2000 when the S&P 500 traded just shy of 1500.
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Chart of the Day
Increasing stock market volatility can sometimes be a sign of trouble to come. For the following chart, we simply counted up the number of trading days in a given year that the stock market as measured by the Dow changed more than 2%. When compared to a long term chart of the Dow, it is evident that stock market volatility often increased as the market started to form a major top and then continued to increase as the market completed the ensuing downturn. The years 1932, 1938, 1974, and 1987 were all years in which some of the last centuries most significant bear markets (-89%, -49%, -44%, and -36% respectively) ended and each year was characterized by extremely high volatility. As for the year 2000 spike in volatility, the jury is still out. This latest volatility spike suggests that either the extreme in volatility accompanied a surprisingly small downturn (-16%) or that a larger correction is still in the works. Stay tuned...
Notes:
- Does the rally continue or is the party over? Find out now with the exclusive & highly regarded charts of Chart of the Day Plus.
Source - Dow Jones
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Quote of the Day
"All of life is the management of risk, not its elimination." - Walter Wriston
Events of the Day
July 14, 2000 - Bastille Day
July 20, 2000 - British Open golf tournament begins (ends July 23rd) - US Women's Open golf tournament begins (ends July 23rd)
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