Spending most of my time so far toying around with plotting in Python. On the back of the LBO and M&A in the earlier 80's, the S&P peaks at 336.77 on August 25th of '87. Towards the end of October, that number is around 240. Some notes:
- It isn't obvious to Google what caused the mid-May slump. It's only off about 10 points but it looks more significant given the broad uptrend. The best I could scrounge was Iraqi-US tensions after an Iraqi plane struck a US ship in the Gulf. Fun quote from the Iranian Prime Minister, Hossein Mousavi:
He reiterated the standard Iranian view: The incident 'shows that the Gulf is not a safe place for the superpowers and it is in their interest not to enter this quicksand.'
- On the 31st of August, more Iran-Iraq conflict seems to be the cause of the pullback from the record highs. From the NY Times, 9/1/87:
Prices of crude oil and petroleum products rose in heavy trading as markets responded to Iraq's renewal of bombing attacks in the Persian Gulf.
Spent more time than I'd like to admit trying to figure out how a plot legend works with subplots, and still failed. Red is S&P, green is volume (in 100 millions). Clearly, frantic unloading when the market starts declining. A sixfold increase in shares traded over 4 days clogged the market with sell orders and trading delays were imposed.
The weekend of the 16th-19th saw a 20% drop on news of a US oil tanker being hit by Iranian forces and money rushed into the safe bets. According to Hafer and Hein, some large sell orders on the S&P index from arbitrageurs put the S&P index at a discount to S&P futures. The discount triggered program trading to take off 16th and up to 47% of the volume in the last half hour came from program trades.
If you had 10k in the S&P index on Oct. 6th, by the 20th, you'd have less than 7k. In ten trading days. Ouch.
The weekend of the 16th-19th saw a 20% drop on news of a US oil tanker being hit by Iranian forces and money rushed into the safe bets. According to Hafer and Hein, some large sell orders on the S&P index from arbitrageurs put the S&P index at a discount to S&P futures. The discount triggered program trading to take off 16th and up to 47% of the volume in the last half hour came from program trades.
If you had 10k in the S&P index on Oct. 6th, by the 20th, you'd have less than 7k. In ten trading days. Ouch.
- CNBC has an old newscast from the 21st, fresh off 5% and 10% rebounds consecutively, that introduced me to late 80's business attire. More enjoyable is how nonplussed everyone seems to be after such a significant crash, but that might be because I'm tired of hearing about Cyprus sending the Euro-zone into depression.
I want to look at trading volumes after major dip days in a series titled, "Redundant Efforts". Have to start somewhere, right?
No comments:
Post a Comment