Prices lost almost all of the previous days advances, as the DJIA, the NASDAQ and the S&P500 posted their 485th loss, since January 2000, after moving higher the day before.
Consider also that on November 1, 2012, each of these three averages closed with a gain larger than one percent; today, though, each index gave back just about all of those increases of the day before.
The outlook for the following day, based on the record, is split evenly between a further loss and a recovery.
However, there is good news: prices should progress to higher levels according to our scrutiny of recent daily price patterns. By including yesterdays closes, we consider the following pattern: losses after a close of two successive gains by the S&P500 and a single advance by the DJIA and the NASDAQ. This array, occurring just three times in the past 13 years, happened only when prices were climbing, during the 2003/2007 expansion.
The logic of our projection results from looking at when given patterns occur. This is quite different than forecasting future prices on the basis of historical analysis of daily price changes which is the basis of typical economic and financial forecasts. Here we make the symmetrical, but opposite, projection, saying if in the past it happened during bull markets, then this event today reveals that we are now in a period of rising prices.
Obviously, inferences of bear markets can be based on the same evidence. We caution, of course, that these are forecast, that they assume that the underlying conditions of our society remain constant.
DJIA -1.05 percent
NASDAQ -1.26 percent
S&P500 - .94 percent
