USMarketView

Rising prices persisted for another session but with a smaller footprint than on Thursday. The NASDAQ moved ahead  .47 percent, followed by the S&P500’s  .26 percent, while the DJIA added just .17 percent. Strings of three consecutive advances occurred just 218 times, with 60 since January 2000.

However, adding the previous pattern of three losses in a row, the frequency falls to 7 overall and 1 in the later period.

Our diagram’s focus is on the 59 repeats and their occurrence relative to the last two periods of rising and falling prices. Whereas the 2000/2003 downturn saw only 8, there were 34 during the following rise. This trend repeats; with 5 in the 2007/2009   decline, compared to the 13 so far in the current upswing.

The resulting inference supports the thesis that the current market is continuing to move forward.

As for the following day, the past offers little guidance. The DJIA posted a fourth positive close 37 times and fell 23 times. The S&P500 split evenly between up and down results while the NASDAQ moved higher just 26 times and fell on 26 of the following days.

DJIA                            .17  percent

NASDAQ                    .47   percent

S&P500                    .26   percent

The good news is that prices continued higher, as the S&P500 added 1.28 percent to Wednesday’s plus 2.16 percent; equally impressive, the NASDAQ gained 1.17 percent following yesterday’s plus 2.05 percent; and the DJIA sustained its earlier 2.27 rise with a further plus .95 percent. It is only the 51^th instance of all three indices experiencing a spurt of 1 percent after gaining more than 2 percent the day before – and the 16^th since 1990.

Yet beware: all of these last 21^st century pairs shared the onus of appearing during the two bear markets of 2000/2003 and 2007/2009.

Further, record of the day following today’s pattern of two gains after a run of three declines, shows near twice as many negative days as advances. Only the S&P500 diverged from that ratio, with only 19 decreases compared to 14 further upturns.

However, should this rally extend to a third straight increase, it will add strength and continuity to the existing affirmative expectations.

DJIA                             .95 percent

NASDAQ                    1.17 percent

S&P500                    1.28 percent

With all three indices advancing more than 2 percent, the market posted its 8^th such session this year. More than just equaling the September 1 gains, today’s 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.

Today’s 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 market’s 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