26 observations since 1960 of SP500 one day selloffs off over 4.5%. There are 5 unique examples of times the market behaved in this manner and quickly reversed without further trauma. Of those, 9/11/1986 and 10/27/1997 and 8/31/1998 seem the most comparable to today. In 1986 and 1997 the market was basically flat over the next year. After the 1998 crash [13.5 % negative], the market immediatly rallied for a month, crashed back to the same level, then resumed rallying until 2000.
Most of the -5% observations were in 2008. As such, based on this data alone the odds of a further 5% depreciation within the next 100 days are roughly 65%.
However, after measuring the 100 day maximum return (the highest the market rallies over the next 100 trading days) the picture is much brighter: of the 26 times since 1960 that the S&P500 has fallen by over 4.5% in one day, the market has reached a maximum average appreciation of 12.4%.
Conclusion: wait on the sidelines for a short while, then consider initiating some medium term bullish trades
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