On February 5, the SP500 experienced a drop of 4% in a day. We ask ourselves the question: is a one-day 4% drop a common occurrence? The table below shows the number of 4% (or more) down days since 1970.
| 4% down | 4% down and bullish | |
| From 1970 | 40 | 5 |
On average, a 4% down day occurred each 1.2 years, which is probably not a rare occurrence.
We next counted the number of days when the SP500 dropped 4% or more during a bull market. We defined the bull market as price > 200-Day simple moving average. Since 1970 there have been 5 occurrences, i.e. on average once every 10 years. We don’t know whether this qualifies as a black swan event, but a drop of more than 4% during a bull market is indeed very rare.
The table below shows the dates of such occurrences. It’s interesting to note that before the February 5 event, the last two 4% drops when price> 200-day SMA occurred around the dot-com period.
| Date | %change |
| September 11, 1986 | -4.8 |
| October 13, 1989 | -6.1 |
| October 27, 1997 | -6.9 |
| April 14, 2000 | -5.8 |
| February 5, 2018 | -4.1 |