Posts filed under “Data Analysis”

917 trading days since down 2% day

A Trader friend emailed this:

It has been 95 trading days
since we have had a down 1% close. This is 4.5 standard deviations from the
historical norm, which means a one in 260,000 chance of happening without the
intervention which we have seen.

It has been 917 trading days
since we have had a 2% down day at the close.  This is 6.13 standard
deviations from the norm, and the second longest streak since 1942. The odds of
this happening without the Fed’s intervention is one in 86,579,799.

It’s great to know that your
tax dollars are working hard to keep the financial system afloat. But what
happens when the support stops, or an event overwhelms the ability of the
Treasury to support the market? 

Paulson says that they have
been able to inflate stock prices more than enough to offset the decline in the
value of housing; but what happens when stock prices can no longer be pushed
higher without running into foreign sellers of dollar assets? Are we going to
buy back all of our overseas debt too?

Fascinating stuff . . .


Note: I received this a week ago, updated the days, but not the statstical odds. Also, I am not sure who the original author is — if anyone can direct me towards that person, it would be appreciated.

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