The NASDAQ fell for the second day in a row whereas the DJIA and the S&P500 declined after yesterday’s gains. Today is the 36th repeat of this uncommon pattern since the beginning of the century. Unlike many patterns of recent days, this combination repeats nearly three times as often during declines as when prices are moving higher.
As a result the outlook for the following day is negative. Our diagram reveals declines outnumbering increases three to one during the 2000/2003 declines; the ratio becomes more favorable in the 2007/2009 bear market, but decreases still outnumber gains 4:3. The negative tilt endures even while the market is bullish; prices falling on the next day more often than they increase.
Yet the last repeat of this pattern on January 31 just five trading days ago- preceded a resonant market, with the DJIA shooting up beyond 14000 while the S&P500 traded above 1500.
DJIA -.30 percent
NASDAQ -.11 percent
S&P500 -.18 percent
