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Unprecedented Times October 16, 2008
-------------------------------------------------------------------------------------------------------------------- This is an abbreviated sample of a comment posted for subscribers --------------------------------------------------------------------------------------------------------------------
In the last Long-Term Summary from September 29th, we looked at some of the extremes that triggered on an historic day. It had been a long, long time since we'd seen selling pressure that heavy.
In fact, the losses on the 29th were so great that it could only be considered a market crash, something we hadn't experienced for 20 years. In a Data Brief that evening, we looked at other market plunges over the past century, and they pointed to a consistent pattern.
Namely, it was common to see the indices bounce back violently over the next one to three days, then suffer the uncertainty of a "retest" of the panic low. It was not at all unusual to see that panic low violated, with a better intermediate-term bottom formed within 5 to 10 days after the initial panic.
The next few sessions played out that pattern very closely, and over the past week we've seen the indices dive, triggering yet more crash-type comparisons. It has been extremely rare to see this kind of persistent selling pressure, and in fact it is unprecedented on many levels.
Before the past week, the Dow had never before suffered through six straight 1% or more daily declines in its 100+ years of history, it had never before lost as much as it did in one week last week, and we had never before seen 75% of all issues on the NYSE hit a 52-week low at the same time.
That kind of activity will trigger many extremes in the guides that we watch, and we haven't been disappointed in that regard. Here are just a few that we discussed in the comments over the past couple of weeks:
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