Yesterday I looked at how the S&P has responded following drops of 5% or more. Most often is has led to a bounce. Thursday failed – and in a big way as instead of bouncing it fell another 5%. The only time going back to 1960 that the S&P has fallen 5% for 2 days in a row was during the Crash of 87.

Since my Dow history file goes back to 1920 I decided to look at that. There have been 4 times that the Dow dropped 5% or more 2 days in a row. They were all between 1929 and 1933.

Of course the Dow didn’t drop 5% on Thursday. It did drop over 4%. So I loosened the parameters to 4%. Results below:

There appears to be a bullish edge over the 1st two days. After that it dissipates. One of the instances included above was the Crash of 1987. The rest of them all took place between 1929 and 1940.

I can’t even count how many tests I’ve run over the last month whose results came up “1987” or “between 1929 and 1940”.