By now the ongoing repetitions of advances after declines after advances seem inescapable even if these sequences cannot be predetermined. Yet todays pattern for the three indices at +1/-2/+1 is only the second occurrence since the beginning of 2000; it is the sixth since 1950. The fact that the number of adjacent positive and negative sessions, that is either +1/-1 or -1/+1, amount to 449 in the past 10 plus years explains this apparent contradiction.
Given these quirks, todays blog focuses on similarities and differences between the current path of prices and those of the last, previous downturn that started in October 2007. The initiating point of the comparison is the last high of this market, on April 23rd, the 47th session of this year. The bottom line of the graph shows the S&P500s daily closing prices for the current sequence. The top line displays the 2007 cycle.
At this moment the 2010 series stops on the 147th trading day of the year, while the top line of 2007 and 2008 prices continues, yet does not include the entire cycle of 355 days from top to bottom.
Do these paths provide clues to this markets future? Obviously despite the many similarities, the answer to this enquiry turns on personal viewpoints and subjective values. Yet, the availability and comparison of these time paths, and of their distribution of adjacent up and down days, provides objective, numerical data to assist our individual search for what will happen in the future.
DJIA .42 percent
NASDAQ .75 percent
S&P500 .55 percent