The little girl study and the horrid Crash of 87

By Rob Hanna

Every once in a while I come across a study that reminds me an awful lot of Longfellow’s “The little girl”.

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After the strong and persistent selling over the last few days I decided to examine other times like now where the SPX dropped at least 1.5% for 3 days in a row. The study below looks back to late 1987 and shows all 10 occurrences over the time period, along with their 10-day returns. The consistency and size of the bounces over the next 10 trading days is “very good indeed”.

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But the prior instance noted at the bottom of the list was “horrid”.

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