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March 16, 2011

Nikkei Two-Day Price Change
By Nat Kellogg, CFA, Associate Director of Research


Over Monday and Tuesday of this week the Nikkei 225 (major Japanese stock market index) fell 16.1% – dropping from 10,254.43 on March 13th to close at 8,605.15 on Tuesday. As this chart shows, this is the worst two-day drop for the Japanese market since the 1987 stock market crash and worse than any two-day period during the financial crisis, or during the deflating of the Japanese stock market bubble in the early 1990’s. This chart also shows that periods of extreme stock market performance in one direction are often followed by large stock market performance in the opposite direction. While the devastation in Japan is shocking and the future uncertain, if history is any guide a substantial rebound in the Japanese market over the next week would not be surprising.

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