Few things are as exciting as “face-ripping” rallies in the stock market. One minute, you’re watching your trading positions sink into the abyss. The next, you’re seeing them soar – and you’re frantically scanning the newswires, social media, or financial television to see what happened.
The only problem? The biggest one-day rallies usually come in BEAR markets, not BULL runs!
Take a look at this MoneyShow Chart of the Day, with data from Hulbert Ratings and MarketWatch. The Nasdaq 100 was created in 1985. Since then, only 16% of its trading days (through mid-2024) were during bear markets.
Yet a whopping 90% of its biggest “up” days – gains of 10% or more – occurred during bear markets. So, did a sizable majority of its 5%-or-more “face-rippers.”
Then there’s the Dow Jones Industrial Average, the granddaddy of the major indices. Look at this table of its top 10 one-day percentage rallies from Wikipedia.
You can see that six of ten came between 1929-1933...two of the remaining ones were in October 2008…while another was in March 2000. The biggest gain was 15.3% in March 1933, while the tenth-biggest was 9.4% back in February 1932.
If you know your market history, you know a little about those periods of time. They came during, at the start of, or only just after the end of some of the worst Dow bear markets in history!
Keep that in mind when you see days like April 9...or yesterday’s intraday surge. The key to a lasting turn isn’t just a face-ripper or two. It’s a steady, base-building process that can lay the groundwork for a more-durable, more-powerful move.
