August 2, 2011 Loss After Loss After Loss
The market suffered its worst loss since the downward spiral begun, eight trading days ago. The DJIA has closed lower for eight successive days and the S&P500s losing streak is now in its seventh day. While the NASDAQ losing count stands only at three, that is because a small gain of .05 percent four days ago, momentarily interrupted its downward spiral.
This is not just another down day. Only 65 other sessions suffered deeper losses in the 2,900 plus trading days since 1999.
Further, as shown by the diagram, most, if not all, of these closes occur when prices are trending down.
Accordingly, we suggest reexamining those earlier projections of prices continuing their rally. Simply put, recent daily patterns are associated more with declines than advances.
The outlook for tomorrow favors positive closes. In the past, 58 percent of the DJIA and the S&P500 following days closed higher, while the NASDAQ advance ratio was just 48 percent.
DJIA -2.19 percent
NASDAQ -2.75 percent
S&P500 -2.56 percent
