Prices closed lower for the 11th time since the beginning of September, 18 trading days ago. Today’s and yesterday’s closes yield a -1/+1 pattern, a combination repeated for the 199th day in this century. The diagram shows these dates, in green if prices moved higher on the following day, or red if they declined on the next day.
We see this pattern repeating mostly at a constant rate, near 6 percent, in bear and in bull markets, although there is a higher frequency during the 2007/2009 decline.
Note also that prices increase more often than they decline on the following day, again with one exception, this time during the 2000/2003 decline.
Yet while these data fail to provide a basis for projecting prices for the next day, they allow a meaningful conclusion: prices often gyrate up and down, or down and up, on succeeding days, in good times and bad, without providing indications of the market’s underlying direction.
DJIA -.36 percent
NASDAQ -.65 percent
S&P500 -.45 percent
