One day wonder?... Or more to come?
That wasn't your average, every-day, up day folks!
The NDX scored the largest up day of the year and the biggest one day gain since the November 2003 low. Now we're left wondering whether the gains were just a "one day wonder" OR did the index make a significant low? Only time will tell. However, there is one certainty: the nature of yesterday's gains and the days surrounding it strike an interesting comparison to the February and March 2003 lows. The chart below explains:
Alright Hoofy, don't get too excited just yet! Over the next week, we should get some sort of a "test." From there, we'll get a better idea as to what the future holds. I was most intrigued by the three day pattern that kicked out the February 2003 low as the most recent occurrence. So I ran the results for the next five days to see how the Nasdaq performs. Of the seven occurrences, the index was lower five days later in five of the seven. The details are listed below.
PAST PERFORANCE DOES NOT INDICATE FUTURE RESULTS.
So what's the bottom line? All critters must agree that yesterday's action is unique and has the potential to indicate a near-term low. After all, the NDX declined more than 12% from the Jan high to the recent low. However, history suggests a re-test of some sort in the very near term and only then will we know the true intentions of the market.
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