All three indices closed higher, but their gains were far smaller than the highs reached earlier in the day. The NASDAQ and the S&P500 enjoyed their fourth straight gain whereas the DJIA’s increase came after Friday’s loss. Notably, these positive results run contrary to the projection based on the history of Friday’s closing pattern. In the past, declines outnumbered advances on the following day.
However, 6 of these 9 previous occasions happened while prices were on the rise this yields a further viewpoint not explored in Friday’s post.
Consider the daily closes of the S&P500 since its last peak in October 2007. The diagram marks that occurrence, 766 trading days ago with the second red, vertical line. The first red line from the left, indicates the low of 676 in March 2009.
Of course eyeballing these data allows many different interpretations. Yet its attractive to consider that the current cycle will parallel the previous one. That conjecture can be supported by the time path and recovery of the 2000/2007 cycle.
Yet, even if such a bold interpretation were to realized in the future, note that in the more than 1,100 trading days to that top, many opportunities exist for major, negative market adjustments.
DJIA .28 percent
NASDAQ .46 percent
S&P500 .21 percent
Note We are in the process of changing from Window XP to Windows 7; we thank you for understanding that our difficulties with this transition have resulted in quality deterioration of recent posts.