In Case You Weren't Paying Attention... Black Monday August 8 2011 - US Credit DownGrade by S&P

So, while I did make a very small amount of money going long in equities starting in 2009, I haven't been an active participant in the markets for some time.  I have been acquiring a bricks-and-morter investment in what English law traditionally referred to as the real portion of one's estate.

The upshot of this is that I (somewhat intentionally) haven't been paying very close attention to the financial markets up until very recently, although this is potentially set to change, as I have had a sneaky feeling that things are about to get interesting, and that means potentially profitable!

The previous post asks whether the long-running (since May 2009) global bull market in equities, and more specifically the bull market in US equities, is either set to break, or has already broken.

Looking back, it seems clear that some event in late 2011 resulted in monetary authorities engaging in prolonged material intervention, as evidenced by the unwavering uptrend in equities.

My first guess was that it was the threat of Greece exiting the European Monetary Union (the so-called grexit) that was the catalyst.  Looking back at the data, it may also be S&P's downgrade of the US's long term credit rating that was the canary in the coal-mine that triggered a new wave of monetary intervention.

Looking at the intra-day range (100% * (high - low) / close) of the S&P500 index, arguably the simplest metric of volatility, for the period starting around the post-2008 crash lows (March 2009) to present (Nov 2015).

If we arbitrarily consider only days where the intraday range is 4% or greater, the following periods of heightened volatility emerge:

2009 March - April
2011 August - November
2015 August

2009 March
2009-03-02 - 4.262150052795297
2009-03-05 - 4.445095597392138
2009-03-06 - 4.726506482484133
2009-03-10 - 5.603112840466933
2009-03-12 - 5.044356235181288
2009-03-18 - 4.708252029961601
2009-03-23 - 6.204734360569685
2009-03-25 - 4.3507642404285605

2009 April
2009-04-20 - 4.310479462751835

2011 August
2011-08-04 - 5.057204996375217
2011-08-05 - 4.170488085510845
2011-08-08 - 7.074839654833585 ! THE BIG ONE !
2011-08-09 - 6.084279293493569
2011-08-10 - 4.796745065848174
2011-08-11 - 5.542195388183927
2011-08-18 - 5.136544952439391

2011 September October November
2011-09-22 - 4.455717270441582
2011-10-04 - 4.4797366430890975
2011-11-30 - 4.0410277795598795

August 2015
2015-08-24 - 5.183789226851636
2015-08-25 - 4.334956637105361

So, looking into it, August volatility is clearly on the magnitude of a market top or bottom.

Looking further back, 2011-08-08 is the most volatile day for the period, and this is what the wikipedia summary for that day has to say:

In finance and investing, Black Monday 2011 refers to August 8, 2011, when US and global stock markets crashed[1] following the Friday night credit rating downgrade by Standard and Poor's of the United States sovereign debt from AAA, or "risk free", to AA+.[2] It was the first time in history the United States was downgraded.[3] Moody's issued a report during morning trading which said their AAA rating of U.S. credit was in jeopardy, this after issuing a negative outlook in the previous week.[4]

By market close, the Dow Jones Industrial Average lost 634.76 points (-5.55%) to close at 10,809.85, making it the 6th largest drop of the index in history.[5] Black Monday 2011 followed just one trading day behind the 10th largest drop of the Dow Jones Index, a 512.76 (-4.31%) drop on August 4, 2011.

...

The greater context of this being that the US politicans were engaged in a farcical performance wherein it was pretended that US government has any option other than to print more money.