Only yesterdays slight build up averted prices from falling for four straight days. This sequence yields a -1/+1/-2 pattern, a combination seen 48 times since 1950, with 22 occurring after January 1, 2000. The NASDAQ slumped -1.57 percent; the S&P500 dip was -1.42 percent while the DJIA fell -1.08 percent.
The diagram of the S&P500 marks the timing of these chains. They appear to be more frequent when the price trend is up. Yet even then, they occur more often when the trend of prices either pauses or reverses. The frequency of these clusters appears to be greater at tops then at bottoms of the trend line. Yet that their presence need not indicate market reversals is evident from their interaction with prices during the 2003/2007 expansion. Then, after hesitating, market values moved higher.Consequently this third incident in the past few months is consistent with expectations of a pause, or a decline and even an increase in prices.As for the following day, in the past a just about even distribution exists between an increase (12 days) and a further decline (10 days). Yet the data indicate that negative changes tend to exceed the size of increases. For example, the DJIAs average decline of -1.42 percent is a third larger than its average increase of 1.08 percent. The NASDAQ record shows the average decline of -2.58 percent more than twice the size of the average gain of 1.21 percent.DJIA -1.08 percentNASDAQ -1.57 percentS&P500 -1.42 percent