Tuesday, July 01, 2008

What if I promise not to post about the Dow again for a month?

It's a good thing the Dow is in the hands of the free market and too big to manipulate. Otherwise, I might suspect something.

You'll recall I laid out different dates that different Dow closings would regress us to. And we seem to be stuck in September of 2006. There's an interesting point in that a 'bear market' is defined as a market close 20 % lower than the high market close. Roughly -- that's good enough for our purposes. On October 9 of 2007, the DJIA had its highest close ever, 14,164.53. Twenty percent lower would be 11331.62, 50.64 points lower than today's close of 11,382.26, 18.39 points lower than yesterday's (quarter end) close of 11,350.01, and only 14.89 points below Friday's close of 11,346.51. By 9:32 this morning, the index stood at 11,236.68, having lost over 120 points in 2 minutes, and it lost 175.87 points in one 84-minute period, and 58.95 in another 32-minute period -- this amount of volatility ending up within 51 points of, but out of, 'bear territory' three days in a row implies that something is forcing it.

A conspiracy theorist would infer a forcing mechanism. Not me; I know it's just the wisdom of the markets.

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