Shades of 1987 and 2008 in Current Level of Stocks Getting Crushed

(Bloomberg) -- Take a peek beneath the surface of the latest turmoil in U.S. equities and you'll find upheaval of a magnitude on par with the two biggest market crashes of the past four decades.

It can be seen in the percentage of stocks making new 52-week lows. Currently 38 percent of equities on the Nasdaq and New York Stock Exchange are trading below that level. Since 1984, there were only eight days when a bigger proportion of shares did so, according to Sundial Capital Research.

Two of them were in 1987 -- during the famous Black Monday crash, when the Dow Jones Industrial Average lost 23 percent in one day, and then again during the following session. The rest were in the aftermath of the collapse of Lehman Brothers in October and November 2008.

“There are more than hints of panic in the air today,” Jason Goepfert, president of Sundial Capital Research, wrote in a note Thursday. “There is clear evidence of wholesale selling on a level we rarely see.”

When at least 35 percent of the stocks on the Nasdaq and New York Stock Exchange made new 52-week lows before, the S&P 500 Index rose on average 3.8 percent in the next week and 3 percent in the next month. There's no guarantee this will happen this time. The benchmark gauge has fallen 16 percent since its September high, piercing one technical support level after another along the way.

To contact the reporter on this story: Elena Popina in New York at epopina@bloomberg.net

To contact the editors responsible for this story: Courtney Dentch at cdentch1@bloomberg.net, Richard Richtmyer, Eric J. Weiner

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