The markets seem to make little sense right now for any investor other than a gloom and doom prognosticator. Days up are followed by even bigger days down. All the major market indices are in correction and oil has hit a level not touched since 2003.
So what's an investor to do? Either join the mass exodus, or ask: Is it time to buy yet?
Let's take a look at the resilience, or lack thereof, or the major indexes when put to the test in recent history, and how long it could be before the market chaos ends.
Send your questions to eric.rosenbaum@nbcuni.com, and we will answer them in upcoming editions of "Big Data Investor."
CNBC Kensho Team
Before you buy a Dow plunge
If recent history is any guide, buying big plunges in the Dow is no better than flipping a coin.
The Dow has dropped by more than 350 points multiple times since the start of the year. Going back to 2000, and counting the 29 times that the Dow has dropped in a single session by 350 points or more, the performance of the index has not screamed buy shortly thereafter.
After a week, the Dow does have the best average return among major market indexes, and has traded positive more than 65 percent of the time, but has generated average performance of only 0.11 percent.
After a month, the Dow also has the best average performance among major market indexes, but only generated 0.50 percent.
As for the worst index across the week, month and three-month period after a major Dow fall, it's been the Japanese Nikkei.
Gas up and go? Maybe no.
U.S. crude oil was down by more than 6 percent on Wednesday. So, where's the bounce?
Crude doesn't bounce back, with negative average performance in the week after a 6 percent, single day drop. The Dow and S&P have managed to generate positive average performance in weeks after a one-day drop of 6 percent or more in WTI crude, but of only 0.5 percent, on average. After a month, the Dow has generated average performance of 0.75 percent, the S&P a return of half that.
A month later, the S&P energy sub-sector, Exxon Mobil, Chevron and Conoco Philips are all positive (and have better average performance than the Dow and S&P) but oil itself remains negative. No one could blame you for steering clear of energy stocks now, so here are the top three Dow stocks in the month after a one-day, steep decline in WTI crude:
Is there any safety in S&P numbers?
The S&P 500 is down more than 10 percent since the start of the year (12 trading days). So we asked Kensho to take a look at which, if any, S&P stocks have had a history of picking up their broken pieces and moving back up.
In the five trading days after a 10 percent dip in the S&P 500, the 7 top-performing stocks are all banks, all up on average between 6 percent and 8 percent: Regions Financial, Bank of New York Mellon, KeyCorp, Bank of America, Morgan Stanley, BB&T, Huntington Bancshares, Wells Fargo and Comerica. Bank of New York Mellon was positive across all 11 instances.
If financials are not your thing right now (earnings have not impressed this quarter so far), here are the S&P 500 stocks that have turned in the highest percentage of positive trades, all at 90 percent or more, mostly consumer-oriented: TJX, 3M, Kohl's, Home Depot, Moody's and Costco.
And now for the S&P stocks to avoid at all costs:
#AskKensho
Stocks have their own corrections. Just look at Facebook and Amazon, two of last year's most resilient stocks, now sitting on one-month declines of more than 10 percent (it's 15 percent in the case of Amazon.) So we asked Kensho whether an investor may be better off cherry-picking among tech heavyweights rather than trying to time the market.
Going back more than a decade, Amazon has fallen by 10 percent or more in a month 26 times. In the month following such declines, Amazon has rebounded by 2.7 percent on average and it has traded positive just under 70 percent of the time.
Facebook, with a much a shorter history as a public company, has dipped by 10 percent or more in a month nine times. It posted average performance in the month that follows of -0.28 percent and trading positive 56 percent of the time.
The Nasdaq Composite is down by more than 10 percent (and having its worst month since 2008). The Nasdaq 100 … getting there, down 9 percent. Are there other Nasdaq issues, maybe not from among the tech darlings, that rebound quickest? We asked Kensho to find stocks that not only rebound but trade positive or negative with the greatest frequency (which may be more important right now than absolute return).
The answer: Get on your tractor and go: Take a look below at the best and worst Nasdaq 100 stocks in the month that has followed such periods.
Got a question you need Kensho's help with? Tweet it to us using #AskKensho, or email eric.rosenbaum@nbcuni.com and we will answer it in upcoming editions of "Big Data Investor."
If things don't improve (not hard to imagine right now) the next question is, what happens if the major indexes enter a true bear market? Our colleagues at premium digital news service CNBC Pro used Kensho data to take a look at what assets perform when the S&P 500 is on its way into a bear market period. Could be time to stock up on down market buffers.
