October 8, 2008
Losses ranged from -.83 percent for the NASDAQ to -2.00 percent for the DJIA as the pressure on prices continued for a second trading week. Yet to consider this as a trend, going from five to six negative days in a row, is an understatement of the rarity of prices falling for six days in a row. Yesterdays analysis focused on the frequency of five straight negative days about 1.5 percent for the DJIA and the S&P500, and .8 percent for the NASDAQ.
Adding a sixth decline cuts the frequency count in half for the years before 2000. Moreover, looking only at this century, the incidence declines much further. The DJIA drops from 21 to nine days; the NASDAQ falls to 13 from 33, and the S&P500 has just two runs of minus six day compared to 17 occurrences of five successive negative sessions.
Looking at the past to infer what might happen in the future, the S&P500 is the most optimistic, experiencing no seven straight declines in this century. The DJIA, however, has two days of further losses, but seven turnarounds to positive closes. The NASDAQ provides the most worrisome scenario, with five of the six day runs turning into seven straight losing sessions, yet the other eight occurrences turn into gains on the following day.
DJIA -2.00 percent
NASDAQ -.83 percent
S&P500 -1.13 percent