Why Monday's Mayhem Was No Surprise

Investment U View in browser IU Plus | Courses | Master Plan | IU Bookstore Saturday, August 29, 2015 Chart of the Week: Why Monday's Mayhem Was No Surprise Anthony Summers, Research Associate, The Oxford Club After a week of steady declines, investors woke up Monday morning to a huge sell-off as both the S&P and Dow dropped hugely in the early minutes of trading. The Dow plummeted nearly 4% before seeing its largest intraday point swing ever. The spread between the high and low of the day? An astonishing 1,089 points. On the heels of this historic market activity, today's chart looks at the Dow's largest percentage losses - and the months when they were most common. This bird's-eye view of market volatility should help us form realistic expectations for the coming months. To create our chart, we took historical price data for the Dow going back to 1965. We then filtered the data for daily percentage losses of 3% or higher. As you can see, the largest percentage losses in the market tend to occur between August and November. Of the 20 largest losses in the past 50 years, eight occurred in the month of October. In his most recent article, Emerging Trends Strategist Matthew Carr noted that of the 20 largest point losses in market history, six were during the month of August. In other words, big losses this time of year are nothing new for the market. But there is good news... Six months after these large single-day losses, the market is typically up 5% on average - which means the volatile days and weeks ahead could actually be good for your portfolio. According to Matthew, "now is the time you should be hunting for opportunities, zeroing in on those companies that are oversold." If nothing else, investors should take comfort in knowing that there's some predictability to all this market madness. One final note... In pulling together the data for this week's chart, I stumbled upon another interesting monthly trend. It's really quite surprising. In fact, it may just change your investment outlook for the rest of 2015. Stay tuned. I'll share that with you next week. Click here to post a comment on InvestmentU.com Exclusive: "Paulson Indicator" Helps Predict Where Stock Prices Are Heading Next A major trend in investing is on the rise. It involves a unique signal some call the "Paulson Indicator" that helps identify pricing mistakes in certain stocks. It alerts you when a stock's price is far too low. And then you capitalize when it swings higher. Early investors could collect average payouts of $1,918 every 10 days thanks to this trend. Here's the full story. We Also Recommend... The Stocks You Should Be Buying After Monday's Drop by Sean Brodrick Friday, August 28, 2015 Monday's drop in the markets hit one sector harder than any other. Fortunately, it's created a HUGE opportunity for long-sighted investors. Read On... The Difference Between What Traders and Investors Should Do Now by Alexander Green Thursday, August 27, 2015 There are a lot of opportunities out there for medium- to long-term investors. But for short-term traders, things look a lot dicier. Read On... How to Make a Quick 20% When the Market Crashes by Marc Lichtenfeld Wednesday, August 26, 2015 Protecting your capital is vital when markets crash. But what if you could make a quick 10% or 20% when they do? There's a strategy for that. Read On... You are receiving this email because you subscribed to Investment U. To unsubscribe from Investment U or to manage your account, click here To cancel by mail or for any other subscription issues, write us at: Investment U Attn: Member Services 105 West Monument Street Baltimore, MD 21201 Keep the emails you value from falling into your spam folder. Whitelist Investment U. Question? Comment? Need help? 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