| Point of Interest - Most striking is that this chart approaches a normal distribution (Bell Curve) thereby suggesting that the daily changes in the Dow are random. The Dow Weekly Percent Change Histogram has similar characteristics. For those of you that actually remember that statistics course we have a few numbers. The mean (average daily gain) is .026% demonstrating the upward bias of the Dow. The standard deviation is 1.07% and translated to English this means that 68% of the time the Dow has a daily change between ±1.1%; 95% of the time the Dow has a daily change between ±2.1%; and 99% of the time the Dow has a daily change between ±3.2%. So if you see that the Dow has dropped well over 2% you shouldn't be to surprised as as it would be expected that the Dow fluctuate more than ±2.1% five percent of the time which equals one trading day out of the month. All this hopefully provides you with a little perspective as to the Dow's daily fluctuations. |
