We’ve been hearing a lot of talk about the pick-up in “100-point” days lately. After yesterday’s 100-point decline, the Dow had experienced a 100+ point move on 7 of its last 8 trading days.
Below is a chart showing the number of 100+ point Dow days over the last 100 trading days going back to 1996. As shown, while we’ve certainly seen an increase in the number of 100-point days over the last few months, there have been prior periods where they were much more frequent.
Rarely do you hear it mentioned that a 100-point Dow move really isn’t a big move at all anymore. At the Dow’s current level, a 100-point gain or decline represents a move of just 0.56%, or 56 bps. That’s a typical day — definitely nothing extraordinary for the market.
Below is a chart showing the percentage impact of a 100-point move for the Dow going back to 1996. Back when the Dow was trading just above 5,000 in the mid-90s, a 100-point move for the Dow was close to a 2% move. That’s nearly four times the percentage change that a 100-point Dow move represents now. The next time you hear someone reference 100-point moves as an example of a pick-up in volatility, remember that a 100-point move just isn’t what it used to be.