Headlines celebrating the DJIA’s advance fail to focus on the continuing saga of opposite daily price changes. And tomorrow’s closes will be down from today … if history repeats itself.
Declines outnumber gains 5:2 and 6:2 during the two bear markets of this century. Indeed the loss ratio is 9:6 in the 2003/2007 expansion. Increases exceed declines only in the current, since 2009, bull market, and then the ratio is just four increases to three losses.
Further reason for caution is the frequency of this pattern at turning points. It’s not just the six happening near the 2007 market top. Almost all of these days occur before, at or after prices change direction.
Attentiveness to this history deserves attention, even though this boom is still some hundred trading days short of the last bull market’s life.
DJIA .77 percent
NASDAQ .53 percent
S&P500 .78 percent
