May 5, 2011 Prices Fall Again
The count now stands at four losing sessions in a row, an event suggesting pessimism and declining prices ahead. Yet this bad news masks a salient and positive fact: this combination has occurred only rarely when prices top out. Yet, since 2000, the market has moved ahead straightaway and without delay. Further, ten of the last eighteen happenings came as the market bottomed. Consequently, we know that prices rise far more often than they decline, following runs of four losses in a row.
Todays diagram reveals these facts, and shows these improving prices over the last twelve years.
Should tomorrows performance continue past patterns, then chances are 2:1 that the NASDAQ will advance, rather than drop for a fifth successive session. The record for the S&P500s next day is almost as good, with eleven gains to seven losses. However, the projection for the DJIA is not as favorable, since its prices fell eight times, and rose on ten days.
Overall, five negative days in a row happened 17 times since 1950, with only six such closes since 2000. Finally, the last five-downs-in-a-row day happened on March 3, 2009, coinciding with the beginning of the current bull market.
DJIA -1.10 percent
NASDAQ -.48 percent
S&P500 -.91 percent
