This Day On The Street
Continue to site
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

Our Autumn of Discontent

By Salil Mehta, statistician and blogger at (Statistical Ideas)

NEW YORK ( TheStreet) -- The fall months may be some of the riskiest months in the market. After all, most of the infamous 10, worst one-day market panics on the Dow, have occurred near October. But a ranked listing of only 10 is a freakishly small sample of extreme events from which to draw any statistical significance.

The history of the Dow goes back to the late 19th century. And with enough data, we can better understand the frequency of when severe market drops occur. We know that Mark Twain once said at about the same time the Dow started, "It is not worth while to try to keep history from repeating itself, for man's character will always make the preventing of the repetitions impossible."

There is a statistically strong historical repetition of market crashes, occurring in the months near October. But so too do crashes more often occur on Mondays, for any month of the year. Of the 29,400 trading days in the history of the Dow, we looked at the worst 294 (or 1%) of them. In order to qualify for this club of the worst 1% days, a daily price drop of at least 3.2% was needed. And while we expect five of these worst 1% days biennially, the most recent one we have had was November 2011.

Here is the distribution of those 294 days by month, in red on the chart. As a statistical alternate, we also show, in light green, the distribution of 294 days evenly spread across 12 months.

1 of 2

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Options Profits

Our options trading pros provide over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • Actionable options commentary and news
  • Real-time trading community
SYM TRADE IT LAST %CHG
AAPL $129.62 -2.20%
FB $79.34 -1.50%
GOOG $532.32 -1.44%
TSLA $247.46 -0.11%
YHOO $42.85 -1.46%

Markets

DOW 18,041.54 -190.48 -1.04%
S&P 500 2,104.20 -21.86 -1.03%
NASDAQ 5,032.7510 -56.6110 -1.11%

Partners Compare Online Brokers

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs