Market Performance in 2008

Jan 8, 2008: 11:30 PM CST

The market has behaved extremely poorly in 2008, but do you know how dramatic the decline has been for 2008?

Let’s compare major US Markets on a percentage basis:

Both the NASDAQ and Russell 2000, which are more volatile and have higher beta, often lead the market both up and down. If that is true again this time, we are in for a rough patch.

Both have declined 8% for 2008.

The Dow Jones and S&P 500, which share similar characteristics, have both declined 5% in ’08.

Keep in mind that a “correction” in a bull market is often defined as a 10% decline. The market has already declined greater than 10% from its October/November 2007 highs.

There is the so called “January Effect,” which partially states that “As January goes, so goes the market” meaning that if January is negative, then the whole year will be negative (or vice versa).

We’ve not yet completed two weeks into the New Year, and already, investors are wishing it was 2007 again.

Time will tell as to what happens next, but let’s hope for the sake of investors that the rest of 2008 is not like the start of 2008.

5 Comments

5 Responses to “Market Performance in 2008”

  1. Ana Says:

    Corey

    The 1400 area of S&P was tested today and did not hold. That area gave way and the S&P has set new lows, below its August and November 2007 closing lows. We are close to a bear environment.

    Quote
    “If one subscribes to the theory that opening prices are dominated by “dumb” money and closing prices by “smart” money, then that then doesn’t seem like a very encouraging trend.” Unquote.

    Still we have two more weeks to end January to hope for a rebound to succeed.

  2. Corey Rosenbloom Says:

    Ana,

    I agree totally. The market needs to find support at prior lows else sellers (bears) will have the upper hand decisively.

    Your quote refers to intra-day price action, does it not? Might it also refer to monthly trends? I’ve also heard it said in reference to day-trading “Dumb money rules the open while smart money rules the close.”

    Either way.

    True, as we’ve seen in the markets as of late, a LOT can happen in two weeks! Thanks!

  3. Geoff Green Says:

    Interesting blog, I just posted a similar blog using my preferred index, the Wilshire 5000. It has come down 12% from 10/07 already. If you look at a chart you’ll see the index has just dropped below the support line of a descending triangle. I’ll be shorting the market on a bullish bounce.
    Geoff

  4. Ana Says:

    Corey

    I guess the statement could apply somehow on all time frames if one knows how to read the charts on different timeframes, since all have opening and closing bars.

    My thinking.
    Ana

  5. Corey Rosenbloom Says:

    Geoff,

    The Wilshire is indeed the broadest index one can reasonably measure, and the 12% loss is extremely disheartening for investors. The major indexes are showing similar patterns, and I can’t find much bullishness at all, except that there may be a bounce as you mentioned.

    Thank you for the comment.