Eerie Déjà Vu As VIX And S&P 500 Both Jump More Than 2.5%

If you follow me on Twitter, you probably saw my surprise when I asked rhetorically, “When is the last time the VIX was making new intraday highs with the $DJIA up 230?”

While I can’t answer that question (though my guess is that today was a first), I did check to see if today’s close set a record for greatest percentage gains by both the VIX (^VIX: 29.66 -0.38 -1.26%) (+3.87%) and the S&P500 (^GSPC: 943.48 +0.61 +0.06%) (+2.58%) on the same day.

It turns out there was one previous instance that topped today’s double spike, back on November 27, 2002, which was the day before Thanksgiving. On that day, the VIX was up 4.93% and the SPX gained 2.80%.

I checked the charts to see how November 27^th fit into the 2002-03 bear market lows. As it turns out, November 27^th, which I have indicated with a purple arrow in the chart below, was just two days before an intermediate high which preceded a 17.3% drop that led to the final bottom process some 3 ½ months later. From this point, the markets began to rally and were bullish for more than four years.

The chart below recounts the remarkably similar history from 2002. In that year, the bear market associated with the dot com meltdown bottomed first in July and then again in October, where it hit 768. From that October low, the market rallied to 939 on November 27^th - numbers that are strikingly similar to the November 2008 low and the subsequent January 2009 high.

In 2003, the SPX put in a third and final bottom of 788.90 on March 12^th, before stocks rallied and never looked back.

The question of the day is whether the current market, like November 27, 2002, still has (at least) one more sharp drop in it…or does the current situation bear a closer resemblance to the May 2003 beginning of a new bull market?

For the record, when I relaxed the conditions on the simultaneous VIX and SPX jumps, the day that comes next closest to today and November 27 is May 11, 1990. At that time, stocks were in a bullish uptrend that would continue for another two months, before being interrupted by a 19.8% drop that would last from July to October of that year.

Statistically significant? Of course not. Anecdotally interesting? I think so.

[Finally, if the chart from 2002-03 looks familiar check out Sunday's Chart of the Week: Emerging Markets. I had to double check to make sure I had not posted the wrong chart.]