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Losses continued – but they were more modest than the day before – as the NASDAQ marked its third straight day in the red, while the DJIA and the S&P500 experienced their second successive loss. It is the 20th repeat of this pattern since the start of 2000, and reiterates many of the yesterday’s marks.

Whereas today’s changes are even more minor than the day before, in the past this pattern suffered substantial losses. The S&P500 average of -1.1 percent, for example, is dwarfed by the largest hit of -4.3 percent; the NASDAQ’s large average of -1.8 percent is minute compared to its largest loss of -6.3 percent.

Yet, just like yesterday’s pattern, these major drops happened long ago, during the decline of 2000 to 2003. However, this long ago distance need not be comforting: it could very well foreshadow a similar, lengthy retreat from today’s values.

Looking at tomorrow, consider the last repeat of this pattern on December 4 of last year. Both the DJIA and the S&P500 initiated a long run of gains, lasting six days for the S&P500 and five sessions for the DJIA. The NASDAQ, though, fell and then experienced a run of up and down closes.

Finally, consider again the quite small sizes of today’s losses. The S&P500 shows only 372 other days -of the 3,000 trading days in this century- with declines this small; while just 190 previous closes exist when the S&P500 and the DJIA fell with numbers minor as today’s.

DJIA                                -.33 percent

NASDAQ                         -.01 percent

S&P500                           -.25 percent

The NASDAQ fell for the second straight day while the DJIA and the S&P500 declined after yesterday’s gains. Today’s result, the 34th repeat of this pattern since the beginning of 2000, has the unusual characteristic of occurring most often years ago, during the 2000/2003 decline.

Finally after eight straight advances the S&P500 declined; the DJIA also declined, after six gains in a row; but the NASDAQ moved higher for the second time. These changes however were quite modest. Indeed, only six other closes this small happened in this century, and is it coincidence that three were in the month of January?

Our diagram reveals most of these days were during the two boom phases, of 2003/2007 and since the last low of March 2009. That is comforting since this batching allows the conjecture that the current upswing will continue.

Yet the projection for tomorrow is not as comforting, because during these upswings in the past, prices on the following day declined almost as frequently as they increased.  However, most of these losses remained well below a full percent. On the other hand, prices increases of more than two percent were quite common when the market was in a bear mode.

DJIA                                   -.10 percent

NASDAQ                            .15 percent

S&P500                             -.18 percent

Yes, the S&P500 finally crossed the 1500 barrier on its eighth straight advance, but the DJIA actually performed much better so far this year. The DJIA added 3.60 percent in the last 17 trading days, almost a third more than the S&P500’s 2.78 percent. And note an oddity; both indices surpassed the NASDAQ; which added just 1.20 percent in the same period.

This DJIA advantage differs from the record, when its performance lagged both the NASDAQ and the S&P500. The average 17 days change, since the bottom of March 2009, is 1.26 percent for the DJIA, less than the NASDAQ’s 1.61 percent and lower than the 1.35 percent of the S&P500.

Similarly, during the 2003/2007 expansion, the DJIA’s 17 day average gain was .93 percent, lagging the S&P500’s .99 percent and the NASDAQ’s 1.2 percent.

These comparisons reveal the market’s torrid pace since the beginning of this year. However, the NASDAQ has nor shared this strength, though its recovery occurred much earlier. And with its recapture standing already at 112 percent of the 2007 top, this lag may seem a source of strength.

The outlook for the following day is less optimistic. But that should not be surprising, with the DJIA’s positive string now at six days; there are just five occasions when this index moved up seven days in a row.   

DJIA                                   .51 percent

NASDAQ                           .62 percent

S&P500                             .54 percent

Another advance for the S&P500 extends its string to six gains in a row. ‘Rare’ fails to do justice to this unusual string:  there exist only 12 other days, of the 3224 trading days, since the beginning of this century.

Further, looking at tomorrow, the S&P500 moved up seven days in a row only eight times in the past 13 years. The diagram shows seven of these took place during the 2003/2007 bull market, while another happened just as the market turned down in 2000.

The DJIA also closed higher today, extending its string to four advances in a row, while the NASDAQ scored its second straight gain. This, together with the S&P500’s sixth increase, yields a pattern seen on just three other days since 1950, with the last occurrence in September 1995.

DJIA                                   .49 percent

NASDAQ                           .33 percent

S&P500                             .13 percent

The S&P500’s fifth gain in a row -the first repeat since January 2010, and only the fifth time since 1950- is creating anticipations of its closing above 1500. Though that goal is less than 10 points above today’s close, the S&P500 has reached those levels only a few times. Further, all those closes happened almost immediately before the market collapses of 2000 and 2007.

Our diagram showing these days reveals prices declining almost in lockstep with daily gains; this makes a strong case, that in the past at least, for caution rather than exuberance when the S&P500 is above 1500.

Yet an optimistic interpretation is that this index, now just .5 percent below the 1500 threshold, held that territory more often in 2007 than in its previous, shorter stay just before the 2000 top.

DJIA                                   .46 percent

NASDAQ                           .27 percent

S&P500                             .44 percent

With the price recovery now in its 972^nd day, the dimensions of its longevity deserve consideration. Since the previous 2003/2007 bull market extended for 1,154 trading days, this simple comparison of just expansion days yields nearly another full year of rising prices.

That the S&P500 and the DJIA still remain below their 2007 highs supports this view. But their current recoveries of 95 percent and 96 percent of those earlier highs do not provide the stoutness as the simple number of days correlation.  Further qualm results from NASDAQ’s strength; it has climbed past the 2007 high, and now stands at 111.5 percent of that mark.

Given NASDAQ’s explosive history of the dotcom boom and bust, that even today it   regained only 63 percent of its previous 2000 high, this index is too volatile to provide a reliable baseline.

Yet today’s DJIA stands more than 2000 points above its peak of March 2000. That 123 percent gain surely deserves a second look.

Caution, as always, is the by word of successful financial management, and this history presents some somber facts for consideration.

DJIA                                   .39 percent

NASDAQ                          -.04 percent

S&P500                             .34 percent

Just 9 other days in this century have the same pattern as today: the DJIA down one day, the NASDAQ up one day and the S&P500 up for the second day in a row. Most of these closes in the past occurred while prices were trending up; but the next day’s activity was split evenly between advances and declines.

These three averages have gone substantially different paths in the year’s first 11 trading days. The DJIA gained more than 7 percent, with 7 advances and four losing days. The S&P500 and the NASDAQ, however, moved up less than one percent, adding .8 and .2 percent, from six advances and five declines.

Yet the DJIA is just catching up, given its 2012 performance of a mere 7.3 percent, while the NASDAQ added 14.0 percent last year and the S&P500 increased 11.7 percent.

DJIA                                   -.17 percent

NASDAQ                            .22 percent

S&P500                              .02 percent

We’ve titled today’s analysis with Yahoo Finance’s headline to reflect the current bull atmosphere. Yet there’s room for moderation. The S&P500 still remains below its October 2007 high, recovering just 94.6 percent of that top –now, some 971 days after the market bottomed out in March 2009. The DJIA recovery is only slightly better, at 96.0 percent. Both these averages have lagged, and continue to fall behind the NASDAQ which today reached 111.5 percent of its 2009 low.

Consider the record of 2007, after the S&P500 reached 1480.93, today’s close. It happened on April 20, then prices advanced even further topping 1550 in mid-July. Then the shoe dropped, prices plunged 10 percent by the end of August. The market then moved sharply higher, retaking that loss. But the recovery was short lived, before the second shoe dropped just days later. Prices continued to fall. It took 355 trading days to reach bottom, before values finally began the recovery we’re celebrating today.

DJIA                                   .63 percent

NASDAQ                           .59 percent

S&P500                             .56 percent