Prices remain in a narrow band as the DJIA and the S&P500 moved up while the NASDAQ declined, falling for the second day in a row. Meanwhile prices continue to advance, scoring their 1,298th day of expansion since the March 2009 bottom.
Today’s pattern has occurred more frequently when prices were trending up in the early years of this century. More recently, however, that has changed; since 2007, this combination is evident more often when prices are on the decline.
Yet, as the diagram shows, prices moved higher on the following day more often during bull markets: in fact, advances on the next day outnumber declines two to one. In bear markets, however, declines outnumber gains on subsequent days.
We observe this pattern often at lower turning points, though it preceded the March 2000 high three times – 56, 22 and 18 days before prices turned down.
DJIA .72 percent
NASDAQ -.32 percent
S&P500 .56 percent
