By Lawrence G. McMillan
On Wednesday, $SPX made a huge move to the upside, rising 58.44 points in a massive display of buy programs that lasted right into the closing bell. Is this the way the market behaves when it’s ready to launch higher, or it is a sign of merely oversold buying which leads to lower prices shortly thereafter? That was the 9 th largest point move in history. Of the other nine in the “top ten” of such moves, every single one retraced that gain – gave it all back – in a fairly short period of time. I was a bit amazed to see that, but if you think about it, the only time the market can rise like that is in response to a very oversold condition – which means the market was already in a downtrend to begin with. So, these large moves have proven to be only temporarily bullish.
Table 1 lists the pertinent information regarding these previous nine largest point gains in history.
The table is in chronological order. From left to right, the columns are: the Date of the initial move. The first row is the one on March 16th , 2000, when $SPX rose 66.33 points...
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