January 8, 2013 Losses Continue
Though down two days in a row, following a gain that came after a loss, the markdowns remain modest: only 66 declines in this century were smaller than todays. That comes to less than 6 percent of the near 1,200 negative closes since the beginning of 2000.
The diagram focusing on todays pattern the second loss after a gain that came after a previous loss-identifies these as occurring with about the same frequency in each of the last four distinct market phases. In addition, prices on the following day moved higher about as often as they declined, with one exception. They increased eight times and declined on only three days during the 2003/2007 expansion.
The distribution of these closes suggests that they favor, or occur when, the market reverses direction. Though prices often change course following these breaks, the most recent events in 2010 with six such patterns in swift succession, saw prices continuing their move to higher levels.
DJIA -.41 percent
NASDAQ -.23 percent
S&P500 -.32 percent
