With the DJIA and S&P500 closing higher for the second day but the NASDAQ falling, today’s pattern yields a close more typical of bear than advancing markets. Though it occurs almost twice as often in declining markets, nevertheless this pattern happens only occasionally.
Our diagram shows just 41 since the beginning of 1996, accounting for about one percent of the 4,400 trading days since 1996.
Nevertheless, their frequencies of 1.48 and 1.70 percent in the two bear markets overwhelm their incidents of .85, .78, and .53 percent in the past three bull markets.
As for tomorrow, in the past prices increased 21 days and fell 20 times on the following day. The frequency of bear market losses outnumbers the declines 10 to 7, whereas bull markets have the opposite tendency, with 13 gains and 11 declines. Yet not much confidence surrounds these numbers, considering their narrow differences as well as the uncommonness of this pattern.
DJIA .77 percent
NASDAQ -.12 percent
S&P500 .57 percent
