U.S. stocks poised for biggest two-day wipeout in history as market loses $9.6 trillion since Inauguration Day

[Bernardo de La Paz]

12. No market goes monotonically downwards to its bottom

The market will rally back at some point, probably multiple points, on the way down to its eventual bear market bottom. Notice how in the bears below, the moves down are jagged, indicating counter-trend rallies on the way down.

When sentiment is this extreme, as it has become, it often sets the stage for counter moves. On the other hand, in October 1987, the market went down about 3% on Thursday, 4% on Friday, and then down over 20% on Monday. As a result, the regulators put in "circuit-breakers" to pause trading when certain downfalls are reached and halt it for the day if it gets bad enough.



(Note that the bear markets have been displaced downwards for graphic effect. You can mentally slide them up.)