These rare corkscrews of prices moving in the opposite direction four days in a row occurred just 25 times since 1950. Yet today’s close is the fifth in this expansion, with the last two happening in late May and early April – just weeks ago. Despite this turbulence, prices have remained near their record setting highs.
We should not minimize this feature because it reflects the strength of the current market. It contradicts the forewarnings of declines in the near future.
Major losses in the last two bull markets happened only after substantial drops in daily prices. Today’s diagram shows the dots –which are the daily percentage changes of the S&P500- in narrow bands. They disperse before every substantial setback.
These happened even in the current expansion, when prices declined before continuing to escalate.
So far price changes remain moderate which, according to past market behavior, should provide some encouragement while considering the future with caution.
DJIA -.50 percent
NASDAQ -.58 percent
S&P500 -.55 percent
