18188 minus 17465 = 4% For the Panic Mongers Among Us

  • Posted on: March 26, 2015

The record high in DJM just 3 weeks ago was 18188 today’s low was 17465. A 3rd grader can tell you that the swing from tip to trough was 723 points. Today’s low is the lowest tick in 7 weeks. For those of you in the Fear Camp, the low of the year so far came on February 2, 2015, posted at 17000. That was also the lowest tick for the Dow in 5-months. The next major low is 15,697, which came in October of 2014 1-1/2 years ago or 18 months, depending on your particular pleasure. Most rational analysts agree that 5% corrections are normal “noise”. 10% is a correction and a 20% move, on a settlement basis, not an intra day basis, is the primary touchstone for a “bear’ market. So here’s food for thought and a reason i get so tired of watching TV commentators flip their lids about point total moves as opposed to percentage value moves. With the high at 18,188 as the benchmark, The following corrections are to be anticipated. 1% is 180 points. let that sink in. 2% is 360 points. 3% is 545 points. 4% is 727 points. 5% is 909 points. 17,279 10% is 1818 points. 16370 15% is 2728 points 15460 20% is 3637 points 14551 If we’re running around like scalded cats after 4%, what happens if we really break? Two Friday’s ago I had a NY analyst I was sharing TV panel space with roll his eyes when i said we could have 800 point moves and not have it be that big a deal. Granted we have not had 1-day 800 point moves, but he missed the point. With the index at this level, even if we did have a 24 hour event drop us 800 or 900 points, it would be within the parameters of “noise”. I know that’s not what folks want to hear. They like to talk about the flat price move. Yet we have this same grand standing and frightening comments anytime we have a 200 point move. To me its just absurd every time it happens. Which is why every time it happens I will roll MY eyes and point out that its percentage moves that count. Not flat price moves. Low and behold we are back in the 5-month old, 1000 point trading range box. When and if we break out to either the upside or the downside, it should be technically significant. Of course, a break out to the upside won’t get much play. Break out to the downside? Give em some gloom and doom.. some stories of Billionaires now reduced to just millionaires? They’ll be ecstatic. This picture says it all.