The S&P500 failed to extend its three day winning streak, the DJIA declined after two up days, while the NASDAQ fell for the second day in a row. This rare combination occurred 134 times since 1950; today is its 34th repeat in this century.
Our diagram reveals this pattern happening more often during bear phases than when prices are rising. With about 2 percent of the 2000/2003 and 2007/2009 closes with this combination, and only .31 percent in the current rising market, we recognize another confirmation that prices are heading higher.
However, the outlook for tomorrow is for another decline. In the past, the DJIA closed lower on the following day twice as often as it moved higher. This projection holds also for the NASDAQ and the S&P500; they declined on 20 days and rose on only 13 of the next days.
DJIA -.46 percent
NASDAQ -.27 percent
S&P500 -.47 percent
