The Dow Jones Industrial Average (DJIA.A) closed on Friday at 11,220.96, up slightly (0.3%) on the day, but down a 'very large' 4.2% on the past five trading days. Over the last 12 months, the Average has lost 15.7%. What's next?
Q: How has the Dow performed in the past when, as of Sept. 6, the DJIA has lost more than 10% over the last year, and is down over the course of the last five days?
A: According to the 11 previous occurrences of this event, EventEdge indicates that the Dow has shown a strong bearish edge that peaks 23 trading days after the event. Thus, the projected date for the peak of the bearish edge relative to the current event date (Friday, Sept. 5, 2008) is Wednesday, Oct. 8, 2008. The Dow declines in 91% of the cases (10 of 11) by an average of 8.7% relative to the close on the event date. The average of the one rally is 4.0%. The overall return of the 11 cases is -7.6%, which, based on the close of Dow on the event date (11,220.96), provides a target price of 10,368.17.
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Anthony Kolton is president of Logical Information Machines and Markethistory.com, Inc.
