August 16, 2011 Retreat Follows Three Advances
The NASDAQ, falling -1.24 percent, gave back about two-thirds of yesterdays gain. The S&P500 lost -.97 percent, nearly half yesterdays increase, while the DJIA, off -.67 percent, lost a third of its previous advance. The pattern of the last two days, -1/+3, or one gain after three declines, is the 25th repeat since the beginning of 2000.
Most of these closes happened while prices were on the rise: 13 between 2003 and 2007, and 7 since the March 2009 bottom. But a caution is required because most of these up days happened near the top, before the market turned down and fell into a lengthy decline.
The same partitions exist also for the following day for tomorrow. The two downhill segments posted two gains and two losses. Significant drive, however, existed while prices were moving higher. Four of the seven closes since 2009 saw advances on the next day, and similarly, twelve of the thirteen 2003/2007 days moved higher.
Yet we must repeat our earlier caution. That only a short time later, prices fell and started a long decline.
DJIA -.67 percent
NASDAQ -1.24 percent
S&P500 -.97 percent