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<\/p>\nLast Friday after the Goldman Sachs (GS) fraud charges, the DOW Industrial Average (DJIA) and S&P 500 (SPX) closed with their biggest dump since February of this year. The DOW recorded a 1.13% loss while the S&P 500 dropped 1.61% on the day. The S&P 500 closed at 1,192.33 — still over 49 points higher than its 50-day moving price average:<\/p>\n
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Our friends at Bespoke Investment Group<\/a> diligently determined 73% of the trading days in the last 2 months have been up days. Since 1980, there have been only 3 other times such an event has played out similarly. However, according to Joe Weisenthal at Business Insider<\/a>, in the 71 trading days year-to-date, the S&P 500 has not booked a single up 2% day and only 2 sessions were up 1.5% days.<\/p>\n If we look back to the last recovery from the Enron\/Worldcom downturn, confidence in the system yielded a gradual ‘floating-type’ climb higher for equity markets. As criminals of the downturn were put behind bars and plastered on front pages, i.e. Jeffrey Skilling and Dennis Kozlowski, confidence gradually restored among investors.<\/p>\n In this cycle, last week<\/a> an ex-trader at Bank of America (BAC) and Morgan Stanly (MS) pleaded guilty to a fraudulent trading scheme. As the penalties and punishments continue for the bad guys, retail investor confidence should improve. Thus, we may not see a big correction that some pundits are seeking, rather more of a lighter one as retail investors feel the waters are safe again.<\/p>\n