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Prices fell again, for the fifth decline in the last seven days. This negative chain started the day after the market scored its last record high on April 2. We believe these actual losses generate a near identical path of the time profile at the end of the last bull market, in October 2007.

Today’s diagram -updating the last one published just days ago- continues to document this parallel. Moreover, the length of the current expansion, now at 1,281 days compared to the 1,154 days of the 2003/2007 growth cycle, provides a further reason to the assumption that prices could turn down.

DJIA -.89 percent
NASDAQ -1.34 percent
S&P500 -.95 percent

Prices recovered today, ending the three day down streak. But considering the daily changes of the S&P500, note the three different highs in the last 53 days. The first was on January 15; then prices retreated, achieving a newer high on March 7; similarly, prices declined again, reaching their latest top last Friday, April 2.

We compare these price changes with the daily changes that occurred 45 days before the last Bull Market topped out in October 2007.

Our diagram shows the daily closes as a proportion of the highest prices. It reveals a significant parallel in these ups and downs. They are substantial, which raises the question: has this market topped out?

DJIA .06 percent
NASDAQ .81 percent
S&P500 .38 percent

Though prices declining for three successive days are rare, they occur just about as often in bull markets as when prices are heading down. The average frequency –as shown in the table- is near two percent. They happened as few as 1.5 percent of all days in the current expansion to as many as 2.3 percent in the previous 2007/2009 bear market.
Accordingly, this losing string in and by itself is not an early indicator of a general market decline.
Prices recovered on the following day, near 95 percent of the time. Our diagram shows just minor differences in the number of up and down days over good times and declining markets.

DJIA -.26 percent
NASDAQ -1.08 percent
S&P500 -.49 percent

The S&P500 suffered its worst decline since January 13. The NASDAQ’s drop was twice as sharp, ranking as the 33rd worse in the 1,276 trading days of the current expansion. The S&P500’s plunge ranks as the 119th worst since March 2009.

Today’s diagram shows the specific dates on which the S&P500 decline ranged from -1.25 percent to -1.48 percent, the latter losing ranking as the 90th worst performance. This history reveals that almost all of these days occurred when prices were bottoming out; just a few happened at market peaks.

Given the extended run-up that started last year, and the record length of this bull market, current concern is whether prices have reached their top and the history of today’s pattern surely does not substantiate apprehension.

DJIA -.96 percent
NASDAQ -2.60 percent
S&P500 -1.25 percent

While all three major averages moved up for the fourth day in a row, the S&P500 did so closing at a new high. This new record comes just 18 trading days after the previous top. That March 7 high came 35 trading days after the previous top of January 15.

Bull markets and four straight gains by the DJIA, the NASDAQ, and the S&P500 go hand-in-hand. Today’s diagram shows just three such closes during the near 1,100 days of the last two bear markets. It reveals this expansion’s large margin of four up days –some 1.4 percent of the 1,274 trading days since the last bottom of March 2009.

The good news revealing the market’s buoyancy just keeps getting better with every session. As of now, no end seems in sight to what is surely becoming the strongest expansion of recent times.

DJIA .24 percent
NASDAQ .20 percent
S&P500 .29 percent

Bull markets with rising prices characterize the combination of three gains in a row for each of the indices –the DJIA, the NASDAQ, and the S&P500. This pattern occurs more than twice as often in expansions than when prices are falling.

Note that six such closes happened last year. On the following day, the S&P500 moved higher every day, scoring four successive gains. The NASDAQ had just one decline, combined with six advances in a row. The DJIA trails, moving higher just three times.

Yet a caution is necessary since these days also cluster near market tops – see especially the many repeats near the end of the 2007 expansion. These totaled eight, with the last event crossing the tape only nine days before the market turned down.

DJIA .46 percent
NASDAQ 1.64 percent
S&P500 .70 percent