That prices added some one percent today is good news, yet the better news is that our three indices –the DJIA, the NASDAQ, and the S&P500– now have put together five increases in the last five trading days. Such runs occurred just 35 times in the 16,000 trading days since 1950, with 13 happening since 1996.
But there is even better news: these last 13 days all transpired during bull markets. Alternatively, saying this another way, note that no bear market in recent history ever saw five positive days in a row.
Further, adding to this favorable outlook, today’s diagram shows the trend of rising prices was far from over when these five successive up days took place. True, one did happen near the 2007 market top, but that was in November 2006, some 223 trading days before the bull market’s end in October 2007
It should not be surprising that the immediate outlook for tomorrow is not rosy. As the diagram shows, prices fell nine times on the following day.
Finally, this post does not dwell on the magnitude of today’s advance since there have been 461 closes this large since 1996. Moreover, since a greater proportion of these good days happened during bear markets, this consideration puts a damper on the above view.
An explanatory note: While the NASDAQ and the S&P500 have a string of five positive closes, the DJIA, on Friday, declined. But since that loss amounted to just .1 percent, our analysis shoulders the burden of this slight distortion.
DJIA .94 percent
NASDAQ 1.26 percent
S&P500 1.00 percent
