Todays almost minute gains lie at the low end of previous closes with todays pattern. The S&P500 average change is 1.23 percent for the 72 previous repeats in this century of one gain after two declines. It added just .17 percent today. Further, these closes have a huge range, extending from a low of .04 percent to top at 7.08 percent. The NASDAQ dispersion is even larger, ranging from .02 percent to 14.2 percent.
Yet a detailed analysis of this patterns history yields good news: prices move higher in the past when daily closes are at the bottom of these ranges.
Consider these comparisons. The average S&P500 daily change during the 2000/2003 decline was 1.72 percent; it fell to .75 percent in the following 2003/2007 bull market. Similarly, it was 2.16 percent in the 2007/2009 drop but it came to just 1.30 percent since then.
Here are the ratios for the DJIA: the average daily close during the two declining markets were 1.27 and 1.21 percent. They fell to just .67 and 1.21 percent through the following 2003/2007 and 2009/2012 advances. These yield identical advance:decline averages of 52 percent in each phase.
One further set of comparisons attests to the higher future prices scenario: while 21 of todays pattern occurred during these last two declines, the other 51 happened throughout the past two bull markets. Or percentage wise, 1.9% are bear market while 2.5 percent are bull market closes.
DJIA .03 percent
NASDAQ .32 percent
S&P500 .17 percent