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