Today’s up tick followed Friday’s decline; that combination came on the heels of two successive gains, these, in turn, came after two straight increases. We find it easier to follow this chain using the shorthand expression of +1/-1/+2/-2; the sign indicates the direction -that is up or down- and the numeral shows the number of days that prices moved that way.
Typically, USMARKETVIEW projects market conditions based on these chains of past price changes. Accordingly, since Friday’s and today’s frequency combination of +1/-1, occurred in greater proportions during the last three bull markets, we consider this result to be consistent with further price gains.
Yet the data reveal an opposite conclusion for the entire six day sequence of +1/-1/+2/-2: this sequence occurred twice as often during bear markets than when prices were trending higher.
This odd mixture suggests ambiguity rather than certainty for the near term.
Today’s diagram reveals a fuller application of this sequence analysis. It shows that recent negative closes cluster in ranges longer than two successive days. It indicates also the decline and absence of the long positive day sequences, or runs, of earlier this year that accompanied the rally that sent the market to record highs.
DJIA .16 percent
NASDAQ .63 percent
S&P500 .42 percent
