Like 221 previous days in this century, prices moved higher after yesterday’s losses. These gains, though, fell short of restoring all of those losses. Today’s analysis, however, focuses on the distribution of these days over the four distinct cyclical phases since the beginning of 2000.
The proportion of these days in the first down wave was 4.6 percent; the following up-market had 8.6 percent. The share in the next, 2007/2009 decline rose to 9.3 percent of all days, while the count in the current bull market is down to 5.4 percent.
This summary reveals an unusual parallel, in that the proportion in the first decline is similar to the proportion in the current increase. And, that the ratio in the early increase is close to the share in the second decline.
Further, this pairing is not isolated. Today, as in the last three previous closes, frequencies in the first decline are near to those in the current increase.
This creates a possible concern, in that we have used the parallels between proportions in the 2003/2007 advance and in the current bull market to infer that prices will continue to move higher.
Thus consistency and logic demand that similarities of the present market with those of the 2000/2003 decline requires projecting declines for the future.
We continue to monitor and report on this possible problem.
DJIA .51 percent
NASDAQ .70 percent
S&P500 .72 percent