April 1, 2009
Prices recovered for the second day in a row and scored even larger gains than the day before. The DJIA picked up 2.01 percent while the S&P500 rose 1.66 percent and the NASDAQ 1.51 percent. This strength defies expectations; in the past, declines occurred twice as frequently as gains when prices increased after falling two days in a row.
Moreover, today is only the fifth time ever, for the occurrence of this pattern of price changes over the last six trading days. Summarized as +2/-2/+2, it means that all three indices had two increases in a row, after falling two straight days, which occurred after two successive positive sessions.
The four previous events are recent, occurring since 2003. A further significant fact is that three of these came during the last bull market. Only the last one, on October 29, 2007, was a prelude to significant price erosion.
Additionally, one other fact deserves consideration. The infrequency fact comes from its simultaneous occurrence for all three indices. The S&P500, for example, has 127 of these +2/-2/+2 sequences since 1950, but only four others when the DJIA and the NASDAQ also closed with this same pattern.
DJIA 2.01 percent
NASDAQ 1.51 percent
S&P500 1.66 percent