Generally speaking, over the past 50 years, the market has seen next-day strength following big selloffs and moderate rallies.

Next Day Price action Following Significant Market Up or Down Moves in the S&P 500
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chart and data courtesy of Michael Panzner

Data for 1955 – 2005:

Market fell more than 4% on 16 occasions:

NEXT DAY #   Days      % of Total       Median Gain/Loss    Average Gain/Loss
  Down             3              18.750%           -1.918%               -7.655%
   Up               13              81.250%           2.425%                2.722%

Market fell between 3% and 3.99% on 29 occasions:

NEXT DAY #   Days      % of Total       Median Gain/Loss    Average Gain/Loss
  Down            12           41.379%           -1.513%              -1.610%
    Up              17           58.621%            0.800%               1.134%

Market fell between 2% and 2.99% on 168 occasions:

NEXT DAY #   Days      % of Total       Median Gain/Loss    Average Gain/Loss
  Down            87             51.786%           -0.876%              -1.136%
    Up              81             48.214%            0.824%               1.324%

Market rallied between 2% and 2.99% on 182 occasions:

NEXT DAY #   Days      % of Total       Median Gain/Loss    Average Gain/Loss
  Down           74            40.659%           -0.416%              -0.610%
    Up           108             59.341%            0.710%               0.971%

Market rallied between 3 and 3.99% on 41 occasions:

NEXT DAY #   Days      % of Total       Median Gain/Loss    Average Gain/Loss
  Down            15             36.585%           -1.113%              -1.010%
    Up              26             63.415%            0.877%               1.009%

Market rallied more than 4% on 23 occasions:

NEXT DAY #   Days      % of Total       Median Gain/Loss    Average Gain/Loss
  Down            10              43.478%           -1.371%              -1.480%
    Up              13              56.522%            1.441%               2.276%

Category: Markets, Psychology, Trading

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2 Responses to “Next Day Price Action”

  1. Barry, Again great work and kudos to Mr. Panzer. Did you like this weeks Tues – Thurs action? Don’t forget the redux.

  2. Chad K says:

    I’d be interested to see those numbers for the last 10 years and last 5… with 1% numbers included. Seems fairly frequent lately to have 1% gain or loss in a day.