Today’s losses were small but their minuteness and infrequency should not be a source of comfort. With our diagram showing these six happenings near the last two market tops, caution seems both a reasonable and a conservative reaction.
That all these closes took place while prices were trending higher is an additional oddity.
Note that looking only at the size of today’s changes misses their crucial feature, their nearness to the end of bull rallies. For prices had strong recoveries on two following days. The S&P500 gained 1.01 percent and then 1.84 percent before the 2000 top.
Prices on the following day reacted differently though during the 2003-2007 expansion. They fell on three of the four repeats, with the last one happening on August 14, 2007. That was less than two months before prices turned down on October 9, 2007.
Though this history is fateful, note that the actual downturns dates occurring quite a bit after the events described today.
DJIA -.08 percent
NASDAQ -.11 percent
S&P500 -.29 percent
