August 26, 2011 Close Resembles Bull Market Pattern
Prices moved up after yesterdays decline, almost recovering their losses of the day before. More significant, though, is the current pattern: increase, after decrease, after three straight increases. The record shows just 15 other closes since January 2000 with this +1/-1/+3 pattern. We identify these with solid red circles on todays diagram.
Notice that only two of these days happened while the trend of prices was down. The other 13 repeats took place during the bull phases of 2003/2007 and the current expansion that started in March 2009.
Further, with prices moving higher then lower and then higher again, todays pattern indicates that the overall direction of the market is up. Of course, we base this projection on the belief that daily patterns tend to follow previous price changes.
Looking at Monday, prices on the following day fell more often than they increased.
Todays price advances are in line with our positive projection based on yesterdays pattern
DJIA 1.21 percent
NASDAQ 2.49 percent
S&P500 1.51 percent
