Though prices only edged higher, the S&P500 added 1.2 percent since this the start of this seesaw on May 16. But the market’s last up-down series of 13 successive direction changes, between March 20 and April 8, increased prices by just .3 percent.
The diagram reveals 46 strings of up-down-up-down days over the last four price cycles. Note how these cluster at turning points, not just when the trend changes from bull to bear, but also while the market continues in the same direction.
Today’s up-after down-after up-after down is the eleventh since March 2009, accounting for one percent of all trading days since that low. Their frequency, however, does not systematically generate identical changes in the trend of prices. Their last occurrence at the end of March paused, but did not halt, the ongoing record-breaking rally.
Yet frequent repeats of this sequence precipitated the drop and the end of the bull market in 2007; it happened again at the 2000 top.
These also anticipated the end of the 2009 bear market.
While declines on the following day outnumber increases 3:2, gains exceed losses during the last three expansions.
Thus tomorrow’s prices should move higher, and if they do, that will signal a confirmation of further near term value growth.
DJIA .34 percent
NASDAQ .16 percent
S&P500 .17 percent
