As the DJIA chalked up its fifth straight gain, the NASDAQ fell for the second day in a row; meanwhile the S&P500 moved up following two successive gains. The resulting pattern occurred just three times in the past 14 years: on October 31, 2003; March 23, 2007; and March 15, 2010.
Shortly thereafter, following all three days, prices hit a brick wall. After the first of these combinations, in 2003, the prices advance did continue, but as our diagram shows, just for a further 54 trading days. Thereafter they moved sideways before growth resumed.
But no such grace followed the next repeat; prices started topped out 52 days later, then moved sideways before the market topped out in October 2007, some 137 days thereafter.
After the latest and last incident before today, on March 15, 2010, prices continued their sharp increase for just another 27 days before collapsing. That drop lasted 79 trading days, with prices zigzagging for another 35 sessions, before the markets growth continued.
This alert follows just three observations and therefore requires significant caution; nevertheless, this history of substantial losses deserves attention.
DJIA .20 percent
NASDAQ -.22 percent
S&P500 .11 percent
