Though the DJIA and the S&P500 moved down again, and even while the NASDAQ declined after three straight advances, today’s pattern has occurred more often when prices are trending up than when they are heading down.
We have seen fifty repeats of two losing days following two advances since 1996; thirty occurred during the 1996/2000 and the 2003/2007 bull markets, ten others happened since the last bottom in 2009. Hence, we take this -40 of 50 happenings when prices are trending up- as a positive signal for higher prices in the future.
If this were not enough favorable news, the outlook even improves when we add the closing pattern of two earlier days. Our diagram shows the past closes when ‘two declines follow on the heels of two straight advances.’
Eight of these nine days happened when the market was moving higher; there is just one during the two bear markets of this century. Such data indicate good times ahead.
Today’s outlook seems quite the opposite of yesterday’s projection. Then we showed the similarity between the current market and the tops of 2000 and 2007. While it appears that these back-to-back conclusions differ, their opposite facets attest to the uncertainties the market faces today.
DJIA -.76 percent
NASDAQ -1.06 percent
S&P500 -1.02 percent
