August 1, 2008
Fridays closes were not much different from a week ago, as the daily changes just about offset each other. As the 31st week of 2008 came to a close, only the NASDAQ had recovered from the early March lows, whereas the other two indices still remained beneath those lows.
In considering the pattern of the past six days, focus on the daily changes. The closes of the past two days were negative; these followed two successive days of rising prices; moreover, these came after a down day that came immediately after an up day. In short, this is classified as a -2/+2/-1/+1 sequence.
These dates are indicated by the vertical lines in the following diagram, which charts the closing prices of all three indices from 1986 to August 1, 2008.
Obviously, the first four of these coincided with rising prices. While todays incident occurs as prices are falling, it could also indicate the lower turning point of the current decline.
Some words of caution are important; obviously the future does not always replay the past. In addition, though, one important issue remains unresolved. If the -2/+2/-1/+1 chain signals an upsurge, why was it not present at all in the long climb to the previous, 2000 price peak?
DJIA -.45 percent
NASDAQ -.63 percent
S&P500 -.56 percent