The NASDAQ dropped more than two percent while the S&P500 fell 1.59 percent and the DJIA lost somewhat more than minus one percent. Today’s pattern -two losses following two straight gains- has repeated 38 times since 1996. Nine of these happened this year. The last just days ago, on August 16 – that turned into a further decline in the next session. Earlier, in June, two other such days turned into gains on the next day.
Today’s diagram shows the distribution of these ‘two down after two up days’ over the last bear and bull cycles. There is no immediate association with expansions or contractions. Nevertheless note that the last, 2007/2009, bear market has the highest frequency. Yet the second largest rate happened during the 2003/2007 bull market.
Price changes on the following day show the same lack of expansion or contraction consistency. Whereas the current expansion phase’s history reveals eight next day advances and just one decline, losses dominate both the 2000/2003 and 2007/2009 bull phases.
Note: today’s declines are the deepest one day losses since April and June.
DJIA -1.14 percent
NASDAQ -2.16 percent
S&P500 -1.59 percent
