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No matter what kind of investor or trader you are, Wednesday was an ugly day in which there were few winners. Longs panicked, shorts got squeezed and the indices ended mixed, indicating no real direction. What


clear is that we're seeing days like we haven't seen since the 2001-02 period. And I have news for you -- it actually wasn't this bad even in 2001-02.

Watching the Downticks

The breadth of selling has been immense in the past few weeks. I often take a look at the

New York Stock Exchange

Tick indicator; at any given moment, it shows you the number of stocks for which the last trade was an uptick minus the number of stocks for which the last trade was a downtick. For instance, if the Tick is +500, that means 500 more stocks upticked than downticked.

On any given day, the Tick will usually fluctuate between +500 and -500. Very rarely is the Tick greater than +1,000 or less than -1,000. The Tick's lowest point in the past five years was hit on April 14, 2000, when the


crashed and ended the boom. That day, the Tick reached -1,679.

The next lowest point for the Tick was -1,495, which it reached on two separate occasions. The first instance happened, as could be expected, in the week after the terrorist attacks, on Sept. 20, 2001. The second occasion was last Friday. In the past month alone, the Tick dipped below -1,300 on five different days -- and that's never occurred before. Mass selling unlike any we've seen in the past decade has been happening. The fact that there hasn't been an actual "crash" has hidden the fact that portfolio devastation has been brutal.

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Tears for Fears

So why are people selling? The economy is great, and earnings are better than they've been in years. Most expect this growth to continue. After all, jobs are being created, and inflation has been largely kept in check. As I mentioned in

yesterday's column, interest rates, even after they go up, will still be at 50-year lows, providing ample liquidity to the system. So what's the problem?

On the front page of Wednesday's

New York Post

, there was a photograph of a U.S. citizen being beheaded by al Qaeda. Several weeks ago, empty suitcases were found at strategic locations in New York's Penn Station, suggesting someone was doing a dry run. Bush is slipping in the polls, leading some investors to worry about an eventual increase in capital-gains taxes. And finally, perhaps people are irrationally worried about interest rates and what effect they'll have on a peaking economy.

Does this mean that the market will go down? No, but a wall of worry is being rebuilt after it was largely smashed down in 2003. In April 2003, after three down years and a rebuilding economy, there were many reasons to buy. But that was a year ago.

All of these concerns -- and probably a few more that an optimist like myself can't think of -- are being built into this market. When this wall is built, like all good walls, it will be scaled. But brick by brick, we are all patiently awaiting its finish, which will conclude when the aforementioned events and possibilities are all finally discounted by the market. It could be over, or there could be more to come. And then, regardless of the economy, global politics or the election, this market will go straight up.

A Look at History

Meanwhile, let's look at days specifically reminiscent of Wednesday to see if the past offers any clues as to what might happen today. Here are two standout features of Wednesday's trading activity:

    The S&P 500 hit a two-month low (actually, a four-month low, but let's get as many examples as possible) in the middle of the day. The S&P closed positive on the day.

Despite the panic that caused the market to dip to a multimonth low, the buyers won out and the market closed positive. How many similar days in the past decade have looked like Wednesday? Altogether, there have been 48 days since Jan. 1, 1994, that had the aforementioned features. The big question is: What happened the day after?

On 22 of those occurrences, the next day brought a gap down: The market opened up below the prior day's close. Of those 22, only seven ended up being up days, and 15 were down days. The past eight occurrences were down days.

On the 26 remaining occurrences, the next day opened higher than the prior day's close. Seventeen of those days ended higher, with an average return of 0.41% on the day.

Although I like to fade gap openings, today isn't an appropriate day for that, as the market has historically tended to go in the direction of the gap after bouncing off a multimonth low.

Where might the market be a week later? A month later? Who knows? I just try to take it day by day.

James Altucher is a managing partner at First Angel Capital, an alternative asset management firm that runs several quantitative-based hedge funds as well as a fund of hedge funds. He is also the author of

Trade Like a Hedge Fund

. At the time of publication, neither Altucher nor his fund had a position in any of the securities mentioned in this column, although positions may change at any time. Under no circumstances does the information in this column represent a recommendation to buy or sell stocks. Altucher appreciates your feedback and invites you to send it to has a revenue-sharing relationship with under which it receives a portion of the revenue from Amazon purchases by customers directed there from