Study: Dow fell 6 days in a row. An EXTREMELY medium & long term bullish sign for stocks


The Dow Jones has gone down 6 days in a row. This is the first time in 15 months in which the Dow has fallen 6 consecutive days. But more importantly, the Dow has fallen 6 consecutive days while remaining above its 200 daily moving average.
In other words, this is the first time in a long time in which the Dow has fallen consistently.
We’ve demonstrated this plenty of times before here at BullMarkets:

When the market’s momentum becomes consistently weak for the first time in a long time, the market usually heads higher in the medium-long term. The last rally before a long term top is marked by weakening momentum.


Here’s what happens next to the Dow when it falls 6 days in a row for the first time in 1 year, while remaining above its 200 dma.

Here’s what happens next to the S&P 500 when it falls 6 days in a row for the first time in 1 year, while remaining above its 200 dma.

Click here to download the data in Excel.

Conclusion

Notice how both the Dow and the S&P almost always went up in the next 6-12 months.
This supports several other recent studies which demonstrate that the stock market will most likely head higher in the next 6-12 months.
So once again, the conclusion is:

  1. The stock market could face some more short term downside.
  2. The short term downside is limited.
  3. The medium-long term is bullish.

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2 comments add yours

  1. Always love your posts Troy.
    Question: Can you do a study on the ratios between indexes over time? NDX/SPX or NDX/DJI type of thing? Just wondering how normal this current NDX divergence is, historically speaking.
    Thanks!

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