Crazy extremes of the stock market recently. What is likely to happen in the next month? Really, we know absolutely nothing. Rocket up or Missile blowing up? History shows: Who knows.
Here are some examples of rapid high volatility high percentage moves in the US stock markets and their subsequent results in the following month:
1. **October 1987 (Black Monday)**:
– **Event**: On October 19, 1987, the Dow Jones Industrial Average (DJIA) dropped by 22.6% in a single day.
– **Result in the following month**: The market experienced significant volatility and partial recovery. By the end of November 1987, the DJIA had rebounded by about 15%, but it remained well below its pre-crash levels.
2. **September 2008 (Lehman Brothers Collapse)**:
– **Event**: On September 15, 2008, Lehman Brothers filed for bankruptcy, leading to a sharp decline in the stock market. The DJIA dropped by over 500 points (4.4%) on that day and continued to fall throughout the month.
– **Result in the following month**: The market remained extremely volatile. By October 2008, the DJIA had lost an additional 14%, and it continued to fluctuate significantly in the months that followed due to the financial crisis.
3. **March 2020 (COVID-19 Pandemic)**:
– **Event**: In March 2020, the stock market experienced rapid declines due to the onset of the COVID-19 pandemic. The DJIA dropped by over 12% on March 16, 2020, one of the largest single-day percentage declines in history.
– **Result in the following month**: The market saw high volatility and sharp swings. However, by April 2020, the DJIA had rebounded by about 30% from its March lows as unprecedented fiscal and monetary stimulus measures were implemented.
4. **August 2015 (Chinese Stock Market Crash)**:
– **Event**: On August 24, 2015, known as “Black Monday,” the DJIA fell by over 1,000 points at the opening before closing down about 588 points (3.6%) due to fears of a slowdown in China’s economy.
– **Result in the following month**: The market remained volatile. By the end of September 2015, the DJIA had declined further, though the losses were not as severe as the initial drop.
These events illustrate that rapid high volatility high percentage moves often lead to continued volatility and uncertainty in the markets. The subsequent month can see partial recoveries or further declines, depending on the broader economic context and any corrective measures taken.
