Three declines in a row are not that uncommon, occurring about two percent of the time. Their frequency is somewhat larger during bear markets –with a range from 2.02 percent to 2.75 percent- while they go from 1.49 percent to 1.82 percent in bull markets.
This combination was seen last in mid-August; prices continued lower for another day then, before the NASDAQ and the S&P500 turned positive. The DJIA decline, however, persisted; it failed to recover until the losses ran for six days in a row.
Yet there is an optimistic aspect in today’s configuration: their declines are far smaller than they have been on average. The S&P500’s daily loss, for examples, has a mean of -1.23 percent with this pattern – about three times deeper than today’s -.38 percent.
Looking at tomorrow, prices in the past on the day following this pattern moved higher more often than they declined.
DJIA -.66 percent
NASDAQ -.14 percent
S&P500 -.38 percent
