The NASDAQ finally declined after a string of five consecutive advances while the DJIA and the S&P500 fell for the second day. Today’s close, the 51st repeat of this pattern since 1996, occurs somewhat more often when prices are trending up. Yet, as our diagram shows, though the difference is quite modest, it is clear that today’s combination of frequencies is definitely a bull market condition.
We need to pay attention, nevertheless to the number of happenings just before the 2007 peak. It is similar, but not as frequent, as their appearance around the 2000 top. Certainly this possibility deserves attention given the long stretch of rising prices, and the fact that recent closing patterns have also clustered near those peaks.
As for tomorrow, prices rose somewhat more often than they declined in the past on the day following this pattern. We saw this in June, the most previous recurrence, when these averages lost near one percent on the next day.
Furthermore, when losses did occur, they exceeded, on average, the size of gains.
DJIA -.60 percent
NASDAQ -.74 percent
S&P500 -.57 percent
