Financial Meteor

As part of the development for my S&P500 Volatility Timing Model, I test several data sets and built several tweaked models. What I'm interested in is finding the "outliers", also known as the financial asteroids. These represent great opportunities for me because I usually buy either mutual funds, ETFs, or stocks in our 401k when they happen.

In the case of the May 10, 2007 selloff, we were hit by a small financial meteor. Take a look at the posted pic, you'll see a green dot that is "out there" from the regular cluster of data points. That was the financial meteor, the outlier! However, based on my model it was a small buying opportunity, nothing to get overly excited about.