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July 16, 2008
# of 52 week lows hits 18 year record
Since Paul went on vacation a few seconds ago and since I'm a strong advocate of overcoming insomnia through work I figured I'd immediately guest post to his blog (thanks, Paul, for asking me).
Quantifiable Edges has an interesting little statistic on 52 week lows.
Basically, 1/3 of all the stocks on the NYSE hit a 52 week low yesterday. The last time this has happened was in 1990.
This has only happened a few times since 1971 (5) and in all 5 instances the market was higher 4 days later and 20 days later. Not enough data to make any reasonable conclusion. Whats interesting is that if you go one further year back, 1970, there's three more occurrences and they were all negative 4 days later. Again, not interesting (too few examples) but its
A) another example of the extreme level this market has taken a beating, even when compared with 2000-2002 (which is somewhat striking if you think about what was going on then: Internet bust, enron/wcom, 911, recession, etc).
B) another example where people are comparing this year to the 70s. I disagree with this. I don't think we are in stagflation. I'm more worried about eventual serious deflation a la what "Helicopter Ben" was worried about in 2002. But I'm hoping at least over the next 4 days (and over the next decade), that 2008 isn't the new 1970 but the new 1990.
-James Altucher
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