The Stock Market as represented by the S&P 500 Index had a bad day, going down 60.66 points to 996.23 for a loss of 5.74%.
Historically, today is a unique day.
Previously, this blog made a study of the S&P 500 from 1950 to March 2008 and looked at the one year forward annual return based on the S&P 500 index in relation to the 52 week high and 52 week low.
We calculated a special value called HOLU which maximizes the distance away from the 52 week high, and minimizes the distance from the 52 week low.
From 1950 to March 2008, there are only 59 trading days where the HOLU value exceeded 30%. And the average one year forward return during those 59 days was a market beating 22.13%.
Today's HOLU Value is 36.79%, with the 52 week S&P 500 low of 996.23, and the 52 week high of 1576.09.
The highest HOLU value during this period was 44.11% on October 3, 1974.
The longest time period where the HOLU value remained above 30% was from August 14, 1974 to October 9, 1974 with the exception of two days in this period where the HOLU briefly went under 30%.
Time to Accumulate?
Based on this, now might be a good time to be a contrarian and start accumulating index funds or ETFs.
However, the market could still go lower and possibly approach the record 44.11% HOLU value on October 3, 1974.
But for the true long term investor, having a cost basis around this level or lower could be a profitable move.
Today's S&P 500