July 17, 2012 Third Reversal in Three Days
Prices moved higher after yesterdays losses, which in turn, followed Fridays gains. This pattern, +1/-1/+1, is the 88th repeat since the beginning of 2000. A look at todays diagram locating these days, shows a substantial number occurring at market turning points. There are eight, for example, at the end of the 2000/2003 decline and the beginning of the 2003/2007 growth era. Another six cluster around the 2009 bottom. Then 13 happen immediately before and just after the October 2007 peak.
Despite this seeming distribution signaling turning points of prices, we have not found a meaningful nor systematic relationship between this pattern and changes in price trends.
Further, these repeats occur as little as two days apart to as long as 211 days. Also the median spacing runs from 13 days since 2007 to 21 days between 2000 and 2007.
Turning to the next day, in the past, prices moved higher as often as they declined. Moreover, this result holds in good times as well as when prices are trending down.
We pass these observations along, noting that our analysis found no systematic insights or relationships between this pattern and prices in the future.
DJIA .62 percent
NASDAQ .45 percent
S&P500 .74 percent
