Prices scored their largest gains of the four day rally: the NASDAQ roared ahead by 1.93 percent; the S&P500 was not far behind, accelerating 1.11 percent. The DJIA advanced .78 percent. Four day runs are uncommon; only 21 have crossed the tape in the past 11 years.
Yet prospects for tomorrow, based on this history, seem far from favorable. Since 2000, the three indices moved higher 9 times, falling on the other 11 occasions. Moreover, since 1950, these averages managed only 33 runs of five straight increases over the span of more than 15,000 trading days.
Nonetheless, watch Tuesday’s closes for a meaningful clue to the near future. All of the five day positive runs took place during trends of higher prices. On the negative side, note that since January 2000, prices fell seven times during bear markets, and moved up four times when prices accelerated.
Thus a fifth straight advance tomorrow could be interpreted as projection a further price recovery, whereas declines, by the same reasoning, imply weaker markets ahead.
DJIA .78 percent
NASDAQ 1.93 percent
S&P500 1.11 percent
Good to be back on line again!