April 8, 2011 Down Again
The week ended with prices down a fraction from Mondays close. Further, todays decline after yesterdays losses results in a pattern of two minus days in succession. The last minus-two-in-a-row occurred on March 15; that was 18 trading days ago. And on the following day, the market dropped again, making it a minus-three-in-a-row series.
All told, since 1950, there have been 396 of these minus-two-in-a-row closes; and 153 came since the beginning of 2000. On analyzing these closes over the last two downturns and for the last and current upturn, we find no relationship between these incidents and the cycle of prices. For example, eight of these occurred, so far, in the current upturn that started in March 2009; and the count during the previous 2007/2009 decline also came to eight.
As for the projection for the following day, Monday April 11, the record reveals a meaningful difference of positive over negative changes. There have been 140 days of a further, three day, decline; but the number of gains on the following day comes to 256.
Yet despite this almost 2:1 advantage for a positive next day, remember that the last repeat, on March 16, resulted in a third decline in a row.
DJIA - .24 percent
NASDAQ – .56 percent
S&P500 - .40 percent