June 9, 2011 Finally Prices Move Higher
Prices edged up today, for the first advance this month. Of course, the string of daily declines had to stop some time. Yet we were fortunate that this continuum of negatives stopped at six successive sessions. Furthermore, todays changes have substance: the DJIA gained .74 percent; the S&P500 added .63 percent while the NASDAQ rose .35 percent.
That only two previous repeats of a six-day reaction show up in the record book reveals the abnormality of such a long chain. Moreover, these existed in the distant past: 1991 and 2000.
On the following day, the NASDAQ headed down again but the DJIA and the S&P500 moved higher.
The two diagrams in yesterdays post revealed these lengthy negative runs past cluster near the end of extensive positive price changes. Of course, these incidents may not, as they did in the last two price cycles, lead to further declines.
Nevertheless, this recent incident suggests that we are now in a time requiring careful analysis, rather than jumping in or continuing with existing investment plans.
DJIA .63 percent
NASDAQ .35 percent
S&P500 .74 percent