March 5, 2009
As if to make up for Wednesdays two and some percent advances, prices broke sharply, from the opening bell. At the close, the indices were down more than four percent. This result is consistent with the past: then losses exceeded gains by a ratio of two to one, one the day after finishing with a +1/-5 pattern that is an up-tick after five straight losing days.
Todays pattern of -1/+1/-5, or a loss following a gain after five down days in a row, has been posted 51 times since 1950, and seven times since January 2000. Four of these more recent events occurred in years when prices fell; the other three came in positive years. Moreover, the NASDAQ and the S&P500 median declines in those bad years were about twice as deep as in the good years.
On the following day in those seven years, all the indices rose four times and fell three times. However, in the down years there was an even number two- of positive and negative days, while the up years had only one loss on the next day while scoring two positive days.
DJIA -4.09 percent
NASDAQ -4.00 percent
S&P500 -4.25 percent