September 10th, 2011
by Doug Short
Yesterday's economic news from Europe was grim, as illustrated by this Reuters article featured at CNBC. The DAX was particularly hard hit, down 4.04% today and 31.06% from its interim high on May 2nd.
Here is a closer look at the DAX since 2007. I've highlighted the all-time high and three remarkable DAX cliff dives since that peak. The start and end points for the declines are arbitrary — they are the boundaries of the steep declines.
Here is a chart of the S&P 500 with the same three time frames highlighted.
As we can see, the middle decline, which coincided with the most dramatic period of the Great Financial Crisis, bears the closest resemblance to the DAX equivalent. The current DAX cliff dive has not been mirrored by the S&P 500, which dropped sharply for the first nine sessions and then moved sideways in choppy volatility. Obviously the current focus of global financial stress is Europe. And Germany is suffering a market implosion of striking proportions.
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