Down after Friday’s gain, and down after Wednesday’s gain, means the market has changed direction four times in as many days. Today’s set is the 88th such pattern in the more than 3,300 sessions in this century.
On the following day, prices moved higher slightly more often than they declined: the ratio is 49 ups to 38 downs.
Disturbing, however, is the continuation of similarities between the 2000/2003 decline and the current, since March 2009 expansion. Next day prices declined more often than they increased in these two segments.
In the same vein, advances outnumbered declines during the 2003/2007 advance as well as during the 2007/2009 decline.
The widespread enthusiastic optimism spreading through the market and media is quite natural given the strength of the current recovery. Our diagram shows that the S&P500’s prices has more than doubled since its 2009 low, closing at 216 percent of that price. That’s substantially better than the 178 percent achieved at this point during the 2003/2007 expansion.
Given this robust performance at just 1,014 days of growth, while the previous cycle lasted 1,144 days, small wonder we’ve got rising enthusiasm and bullish expectations.
DJIA -.44 percent
NASDAQ -.30 percent
S&P500 -.33 percent
