December 28, 2012 Five Losses in a Row
A more somber view replaces yesterdays optimistic post as the market fell again, even though just six other such closes happened in the last 13 years. Moreover, its almost obvious that the following day will see prices turning up, as they did on five of those previous lengthy declines.
What is disturbing though is that it some 200 days elapsed before the S&P500 fully recovered from its last hit of five down days in a row. This happened in February 2004, some 242 days into the price expansion that was to last for another three years.
But as our first figure shows, lengthy price corrections took place four times before the S&P500 finally moved to higher ground without suffering substantial relapses. That can but cause concern.
However, when considering the length of the last expansion, between 2003 and 2007, the outlook still remains bright. Our second diagram reveals that our current expansion is just 958 trading days from its last bottom. That it is some 200 days younger at this point than when the previous bull market turned down.
A closer examination reveals remarkable symmetry; that whereas the path of the current market twice exceeded the 2003/2007 growth, it has also returned as often. Todays close returns the S&P500 price exactly to where it was in the previous growth cycle.
DJIA -1.12 percent
NASDAQ -.72 percent
S&P500 -1.00 percent
