DJIA AND S&P500 -DOWN 6 DAYS — NASDAQ DOWN 5 DAYS !!
Today’s close -the NASDAQ down for the fifth successive day while the DJIA and the S&P500 in the red for the six day in the row- has not occurred since April 1984. Indeed, the record shows only one other day, in 1975, with this pattern since the beginning of 1950!
Note that prices continued their fall in both cases after posting this pattern, though these two days are far apart and with differing circumstances.
Our conclusion is that negative runs that last for five and six days signal further and substantial declines in the immediate future. But that prices recover soon thereafter, and moreover, that subsequent gains more than make up these deep earlier losses.
That’s what happened in these two earlier repeats of the DJIA and the S&P500 down for six consecutive days while the NASDAQ closed down for five days in a row. Yet the initial circumstances differ substantially. In 1975, the decline was continuous, lasted just 38 days but amounted to a 14.1 percent loss. In 1984, prices moved higher at first, the decline took 75 days but amounted to only minus 5.0 percent.
This projection, as any based on just a two time history, requires cautious consideration. Yet because these repeats, so far apart, result in identical price patterns, actually strengthens the conclusion.