Thursday, October 29, 2009

Down Friday/Down Monday Warning Indicator

According to Stock Trader's Almanac, a Down Friday/Down Monday market behaviour is often a warning sign of negative market direction, frequently coincides with market tops and near major market bottoms.

Since 1995, there have been 126 occurrences of Down Friday/Down Monday, with 31 falling in bear market years of 2001 and 2002 producing an average decline of 12.7%.

In 2001/2002, Dow loss 13.5%/11.9% over the next 3 months, lasting 53/54 days, after the occurrence of the Down Friday/Down Monday market pattern.

On average, Dow loss 5.4% over 35 days after the occurrence.

Did you notice the Down Friday/Down Monday behaviour over the last weekend (October 23 & October 26), the first since August 31 2009?

Hmm... possible warning of market correction over the next few weeks?

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