In every major market downturn throughout history there were big ups, big downs and giant waves of momentum, and this time around will not be any different.
As I have explained repeatedly, markets tend to go up when things are calm, and they tend to go down when things get really choppy. During a market meltdown, we fully expect to see days when the stock market absolutely soars. Waves of panic selling are often followed by waves of panic buying. As you will see below, six of the ten best single day gains for the Dow Jones Industrial Average happened during the financial crisis of 2008 and 2009. So don’t be fooled for a moment by a very positive day for stocks like we are seeing on Tuesday. It is all part of the dance.
At one point on Tuesday, the Dow was up over 400 points, and many of the talking heads on television were proclaiming that the stock market had “recovered”. This is something that I predicted would happen yesterday…