June 7, 2011 Fifth Loss in a Row
Prices failed to maintain their gains, then declined and finished in the red. It was the fifth straight decline for the DJIA and the S&P500. While the negative NASDAQ close was only its third successive loss because the index managed a .15 percent advance in one of the in-between days- it does not change the score sufficiently to include it in todays pattern analysis. Thus the reckoning will use only the five successive DJIA and S&P500 loss sequence.
The diagram of our usual S&P500 closes indicates twelve such previous experiences since 2000. Five occurred during the 2000/2003 decline and three others came in the recent 2007/2009 drop. Further, their timing coincides with declines. Additionally, even in the 2003/2007 rally these events came immediately before price declines.
Yet these days cluster also just before prices change direction, as in 2003 and 2009.
This evidence makes it clearly illogical to conclude that these events are not systematically related to future declines. Further, we note that todays pattern is the second recent repeat of a turn in the market. Certainly, experience indicates that this sequence is not, has not in the past, been associated with further price advances. Accordingly, it contradicts the many previous diagrams that show the days pattern associated with further increases in asset appreciation.
DJIA -.16 percent
NASDAQ -.04 percent
S&P500 -.10 percent
