With all three indices advancing more than 2 percent, the market posted its 8th such session this year. More than just equaling the September 1 gains, todays closing prices stand substantially higher. The NASDAQ gains total 17.1 percent in the 42 market days since September; the other two averages lagged that rate, but nevertheless the S&P500 added 11.7 percent, while the laggard DJIA improved 9.6 percent.
Todays diagram focuses on market conditions contiguous to these eight instances. It appears that these triple-plus-2-percent advances strike either at, or near, the top of a strong advance; that prices fall substantially thereafter.
Indeed, this year, none came before a substantial advance: four coincided with market tops, while substantial price corrections promptly followed the other three.
The record of the past 11 years augments this reasoning. While 10 percent of the 2007-2009 bear market days featured triple-plus-2-percent results, the current upswing share is just 5 percent. Similarly, the 5 percent mark of the 2000-2003 decline exceeded the following bull markets less than one-half percent.
These pairings may be coincidence, but on the other hand, not much evidence supports the feeling that such days promise higher prices ahead.
DJIA 2.27 percent
NASDAQ 2.05 percent
S&P500 2.16 percent
