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Downside Test?

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After five consecutive losses, yesterday's rally in the NDM was not much of a surprise. However, the index gapped higher on Monday and never traded lower. This type of action was somewhat unusual. Only six times have the ND futures recorded five consecutive losses and then gapped higher without trading lower on the sixth day. The next day's close was lower in four of the six. However, the most compelling observation was the intraday low. The next day's low was negative by at least 1.2% in all occurrences. For today, this would suggest a trade below yesterday's low in the NDM. Given that overnight futures are higher, this fact is worth noting.

As always Minyans, past performance does not indicate future results. Ironically, the most recent occurrence was March of this year. The chart below highlights the current six day pattern as well as the March 2004 pattern.

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