September 25, 2012
With the three averages declining today, the market added another count to the unusual patterns of recent days. The count now adds up to four losses in a row for the S&P500, three straight declines for the DJIA and two negative closes for the NASDAQ. Just four such patterns exist in our data base that goes back to January 1950. Furthermore, the last such day occurred in June 1991! The other three go back even further, to February 1991, then to 1983 and 1982.
The record shows that losses continued only twice, in 1991, to result in a ‘S&P500 five straight declines, accompanied by four DJIA and three NASDAQ losses in a row’ combination.
Surely this long-ago, sparse record provides no basis for anticipating future prices. While we continue our search for relevance of these extraordinarily uncommon patterns, our efforts so far have fail to provide any clues.
Nevertheless, we counsel a heads-up caution while the financial markets continue moving in these recently unfamiliar patterns.
Here is a more recent data point: since January 2000, the S&P500 suffered four straight losses some 72 times, but it turned positive on 44 of the following days, adding only 28 fifth consecutive declines.
DJIA -.64 percent
NASDAQ -1.31 percent
S&P500 -.91 percent