Worst 1-Day Decline for SPX since 1987

V

VoodooMMI

I show 3 days since 1966 that the S&P 500 index fell 8% or more from the previous trading day's close.

Sep 29, 2008 down 8.79%
Oct 26, 1987 down 8.30%
Oct 19, 1987 down 20.41% < Black Monday

Any old timers care to share some stories? I wasn't in the industry in 1987 but this kind of feels like Oct 27, 1997 when the SPX was down 6.86% in a day. What happened on Oct 28, 1997? We were down about 2% in the morning, then erased that loss and closed up over 5% from the previous day's close.
 
I was. I started trading live in July of '87. I was in no way prepared to deal with it. Made a few S&P trades (which were 10 times larger than ES), but was a deer in the head lights most of the time. My partner was also new to trading and took a big gold position thinking flight to safety. The opposite happened as a market crash is deflationary by definition. Poor guy got crushed 3 months into his trading career.

Oh, BTW, we had to call in our orders and didn't even know if we had a position for minutes at a time on occasion. Also had to pay $800 per month for data, used a single 14" screen, and IBM PC with some absurd amount of RAM and a 20 MEG hard drive with 5.25 floppies. Got data through FM via Bonneville, which became ESignal. Designed systems (which never made money) with System Writer, which became Trade Station, and absolutely no one had a clue what I did for a living. I basically gave money away for a year is what I did for a living. Absolutely no one to mentor me, no internet forums. Just books.

Crazy shit.
 
Just for fun here are the DJ30 drops, -6.98% or greater going back to 1917:

2/1/1917 -7.23
10/28/1929 -13.48
10/29/1929 -11.70
11/6/1929 -9.93
6/16/1930 -7.85
9/24/1931 -7.07
10/5/1931 -10.73
1/4/1932 -8.09
8/12/1932 -8.42
10/5/1932 -7.16
7/20/1933 -7.05
7/21/1933 -7.89
12/4/1933 -9.10
10/18/1937 -7.23
10/19/1987 -22.61
10/26/1987 -8.04
10/27/1997 -7.18
9/17/2001 -7.13
9/29/2008 -6.98

So we have the 19th worst drop since 1917. Almost 100 years.

And if you ignore the hell which was the 1920s-1930s, it was the 6th worst drop since 1937. In 71 years!

Historic times for traders...
 
Quote from Jayford:

I was. I started trading live in July of '87. I was in no way prepared to deal with it. Made a few S&P trades (which were 10 times larger than ES), but was a deer in the head lights most of the time. My partner was also new to trading and took a big gold position thinking flight to safety. The opposite happened as a market crash is deflationary by definition. Poor guy got crushed 3 months into his trading career.

Oh, BTW, we had to call in our orders and didn't even know if we had a position for minutes at a time on occasion. Also had to pay $800 per month for data, used a single 14" screen, and IBM PC with some absurd amount of RAM and a 20 MEG hard drive with 5.25 floppies. Got data through FM via Bonneville, which became ESignal. Designed systems (which never made money) with System Writer, which became Trade Station, and absolutely no one had a clue what I did for a living. I basically gave money away for a year is what I did for a living. Absolutely no one to mentor me, no internet forums. Just books.

Crazy shit.
More...


Yep, those were the days. I was trading commodities at the time. I remember that I paid $1300 for a new computer that had a 20 MB hard drive, and 640 kb of RAM (paid extra to get the 640 kb, versus the 512 kb of RAM that was standard with the machine). No internet at the time, of course. I had a Hayes Smartmodem that operated at a lightening fast 1200 baud rate (i.e. 1.2 kbps) over the phone lines.

I remember seeing lots of shell-shocked people, that day in 1987, but as I was trading mostly agricultural commodities, I don't have much in the way of trading memories from the day. I do recall calling in to Lind Waldock ~5+ times per day to get quotes on the various markets I was trading.
 
Quote from Wayne Gibbous:

Just for fun here are the DJ30 drops, -6.98% or greater going back to 1917:

2/1/1917 -7.23
10/28/1929 -13.48
10/29/1929 -11.70
11/6/1929 -9.93
6/16/1930 -7.85
9/24/1931 -7.07
10/5/1931 -10.73
1/4/1932 -8.09
8/12/1932 -8.42
10/5/1932 -7.16
7/20/1933 -7.05
7/21/1933 -7.89
12/4/1933 -9.10
10/18/1937 -7.23
10/19/1987 -22.61
10/26/1987 -8.04
10/27/1997 -7.18
9/17/2001 -7.13
9/29/2008 -6.98

So we have the 19th worst drop since 1917. Almost 100 years.

And if you ignore the hell which was the 1920s-1930s, it was the 6th worst drop since 1937. In 71 years!

Historic times for traders...
More...

interesting how volatility begets more volatility. even the above sample that only contains large drops has two sets of back-to-back drops (1929 and 1933). also in 1987 the drops were separated by only a week.
 
You should have seen it in the wheat pit that day. Wheat opened a little lower, then went lock limit down. Since I was spread out the wazoo, I wasn't affected at all. I do remember grown men crying, and a lot of coke being snorted in the stairwells that day. That night at the bar, we all got really drunk.

Jeff
 
I don't think the SP was what was the killer today. The ND or NQ got killed today. I was watching the leaders within that sector fighting all day, to hold onto some levels, but just kept grinding lower and lower. There was real wealth destroyed today in the tech sector. That's the area that concerned me.
 
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