Layman's Dow

The DJIA (Dow Jones Industrial Average) moved almost 400 points yesterday on news that Citibank reported profits in January and February. The company's own stock rose over $.40 on the news. This is big news, but most people have glossed over it because we're still stuck in the past, when the DJIA was near 14,000.

At the previous high - or even at the more reasonable 12,000 level - we saw moves of 500-600 points on occassion, prompting cries that the market was hopelessly volatile. (See the beginning of 2008 here) Those moves represented 5% of the market. Now we're in less than half that market, so 400 points represents a move of over 6%. The volatility hasn't gone down at all. If anything, it has scaled down somewhat, but is still higher than it was 6 months ago.

This could be a Dead Cat Bounce - market jargon for a rise after a steep drop that is followed by another drop...an indication that some investors thought we'd hit bottom when, in reality, we still had a way to go.

Oh, and Citi's move was from $0.90 - $1.40, over 50%. I know some other stocks that were hard to value because extraordinary level of government support. The Maes anyone?

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