Todays S&P500 gain, of 4.40 percent ranks as its 26th largest since 1950, and is number 16 since January 2000. Yet given the substantial losses last week, the index failed to recover its recent high, reached last Monday. An almost identical outcome describes the other two indices. The NASDAQs 4.81 percent comes in at number 40 from the top, while the DJIA stands in the 17th position.
As for the pattern, there are just 9 incidents showing a positive close after four successive losses. Furthermore, only one of those beat todays gain and only one other came anywhere close to what the market achieved today.
Unfortunately, these two incidents fail to provide insights into the long term path of prices, since the larger increases came just before the 2003 bottom, while the other occurred just after the 2007 top!
The short term, projection for tomorrows close based on this record, fails to provide an optimistic outlook. In the past, all three indices managed only three days of further improvement, while losses were posted on the other six.
DJIA – 1.33 percent
NASDAQ – 2.33 percent
S&P500 -1.53 percent