WTF Chart of the Day: Dow Component Changes On Sep 20, 2013

By Lawrence

Dow is going to have another major shake up on September 20, 2013. Since component changes is such a rare event, its impact on the market is profound. Here are the charts of Dow over the last 4 component changes.

 

September 24, 2012. Down 1100 points.

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June 8, 2009. Down 700 points.

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September 22, 2008. Down 3600 points.

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February 19, 2008. Down 800 points.

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As you can see, the short term impact on Dow right after component changes can be quite bearish.

Do you think we will have an exception this time?

Comments
  • smilingsynic September 17, 2013 at 8:43 pm

    That long term BA target was hit during the last week.

  • Lawrence Chan September 18, 2013 at 9:23 am

    Many breadth readings are very overbought. A pullback is due.

  • geosing September 30, 2013 at 7:07 am

    A great example of “history repeats itself” and “there is nothing new under the sun”. 🙂
    The Dow danced to same tune again. Excellent study and accurate forecast! It also appears that the index bounces back after the drop – retracing at least 50%. Is there a 1-2-3 buy ahead, once the flush is complete?

    • Lawrence Chan September 30, 2013 at 9:22 am

      The 2 most recent ones are followed by QE renewal announcements hence S&P took off.

      This time they said it is a wind down …

  • geosing September 30, 2013 at 7:09 am

    May be the Government Shutdown drama will help the sub 15K tag. Well orchestrated. How do they plan these things?

    • Lawrence Chan September 30, 2013 at 9:23 am

      Stupidity at crowd level (“a congress of baboons”) can be amazing at times =)

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