The DJIA, NASDAQ and the S&P500 gained near one percent, barely more than needed to restore the record setting closes of April 30. The resulting pattern of a positive day following a negative session has occurred 269 times over the last five price cycles.
On the following day –tomorrow- prices continued their gains 52 percent of the time. That proportion was somewhat larger for the 1996 and 2007 bull markets, but losses outnumbered gains 51:49 in the current expansion.
Today’s positive changes are a welcome departure from the losses that happened on the second trading day after a new record high. As discussed in yesterday’s analysis, prices declined sharply on the second day following the last two record highs. There were steep reversals in 2000: the NASDAQ fell -2.51 percent, the S&P500 lost -1.06 percent and the DJIA declined -.81 percent.
The reversals for the 2007 top were -1.40 percent for the NASDAQ, -.52 percent for the S&P500 and -.45 percent for the DJIA.
DJIA .89 percent
NASDAQ 1.26 percent
S&P500 .94 percent