Todays advances wiped out yesterdays losses – and all three averages closed higher than on Tuesday. The NASDAQ had the best comeback, gaining 1.93 percent and recovered further than its previous -1.46 percent decline.
The last several sessions traded large losses and large gains to the extent that the NASDAQ has had a net advance of one percent. Neither the DJIA nor the S&P500 did as well, ending slightly lower than at the start.
There have been six other such episodes of large losses and offsetting advances stretching over eight days in the 21st century. The S&P500 diagram marks these with vertical lines.
Using these to generate a non-quantitative, or eye balling, projection can result in widely varying forecasts. Since all but one occur while prices are trending down, one view could associate these with expectations of future declines, ending the current price recovery.
Another, just as valid and subjective as the decline prediction, focuses on the price changes almost immediately after these offsetting cycles. Clearly most of these predate troughs and a trend of rising prices.
Moreover, neither of these two projections may develop; and hindsight will allow a further, better forecast. Nevertheless, just looking at this history generates aspirations of a way to convert what has been to what will be.
Enjoy your holiday!
DJIA 1.37 percent
NASDAQ 1.93 percent
S&P500 1.49 percent