Almost mirror images of Monday’s negative changes, enabled today’s gains to bring these averages almost to Friday’s levels. Summarizing this see-saw of up/downs with the pattern notation of +1/-1/+1 allows the following comparison of this history.
We look at the 79 instances of these swings since January 2000, and note first that their frequency has increased in recent years: just 56 repeats took place in the 1950 to 1999 period.
Furthermore, during the 355 trading days between 2007 and 2009, the market saw this pattern account for 4.5 percent of all trading days. This period covers the price decline between the October 2007 top and its bottom in March 2009. To see if bear and bull spirits coincide with these three day see-saws, we compared their frequency over the two complete cycles since the March 2000 bottom.
The results, pictured in today’s diagram of just these three day episodes, do not support that contention. Whereas the 18 repeats of the 740 day decline result in a 2.43 percent frequency, and the 33 incidents over the following recovery represent a larger 2.86 percent proportion, the following cycle’s count shows the relationship to be opposite. The 2007 decline had 4.51 percent of its trading days showing this three-day sequence whereas the upturn since the 2009 low, so far, has a smaller ratio of 3.08 percent.
Consequently, the data do not support a relationship between up-and-down repeats and price changes. However, they are consistent with the contention that instability of price trends has a historical uptrend; that price volatility has increased in recent time.
DJIA .43 percent
NASDAQ .41 percent
S&P500 .49 percent