Q2 STOCKS TO BUY

What the Dow's 5-Day Losing Streak Could Signal in the Short Term

The Dow Jones Industrial Average (DJIA) is on pace for its fifth consecutive daily loss

Jan 19, 2017 at 2:36 PM
facebook X logo linkedin


The Dow Jones Industrial Average (DJIA) -- the U.S. stock market's blue-chip barometer -- is on pace to finish lower for a fifth consecutive day, slumping as anxiety creeps higher ahead of Donald Trump's inauguration tomorrow. This marks its longest losing streak since early November. Schaeffer's Senior Quantitative Analyst Rocky White compiled data on Dow losing streaks of five days of more, going back to 2010, comparing the returns over subsequent weeks and months to the blue-chip index's anytime returns.

Dow After 5 Day Losing Streaks January 19

As you can see in the tables above, the Dow has tended to outperform following a streak of at least five down days. The percent positive for returns in the session immediately following a five-day losing streak is slightly lower -- and below 50% -- suggesting that there's an increased chance the streak continues to at least a sixth day. But, at every time frame further out, the post-losing-streak Dow is positive more often than the anytime Dow, with higher average returns.

In fact, three months after a losing streak of at least five days, the Dow has averaged a return of 4.7%, and been positive 81.8% of the time -- a significant outperformance compared to the index's three-month anytime average return of 2.3%, positive 70.1% of the time. Plus, standard deviation after a losing streak remains more or less in line with its anytime figures, suggesting little change in volatility is to be expected.

Dow 5 Day Losing Streaks January 19

In this table, you can see the return after each losing streak of five days or more, going back to 2010. This encompasses 23 prior signals in all. The two most recent streaks saw a negative one-day return, indicating the Dow's losing streak extended beyond five days. In fact, both of these occurrences saw the Dow drop for seven days in a row. But per the table below, which shows the longest losing streaks since 2010, the Dow has not closed lower for more than eight consecutive sessions, going back to 2010.

Dow Longest Losing Streaks January 19

Even though the longer-term outlook appears optimistic after a losing streak of at least five days, there is still reason to be hesitant in the near term. After all, the Dow Jones Industrial Average has historically turned in a negative performance the week before AND the week after a presidential inauguration, going back to 1937. 

Let us help you profit from market volatility. Target big gains in short order with a 30-day trial of Schaeffer's Weekly Volatility Trader!
 
 

“Buy This Stock Now!” - Expert Who Called 11x On TSLA

He called a rare 11x on Tesla…

But now, thanks to Elon & Trump’s new alliance…

He says there’s a new opportunity that could be 1,000x BIGGER than Tesla – and it could completely revolutionize a $23 Trillion market.

It’s trading for less than $5 per share right now…

But it won’t be under the radar for long.

Discover The 1,000x Bigger Elon Opportunity Here

GRAND SLAM COUNTDOWN

 
 

Featured Articles from Trusted Partners:

👀Learn How Dividends Create Passive Income for Life
Receive $200 Off Motley Fool Epic. The Motley Fool Epic $299 discounted offer is based on $499/year list price. Introductory promotion for new members only. Take control of your money and your portfolio with Motley Fool Epic.

💵New Income System Could Pay You $4,243 Monthly
You could collect an average of $4,243 per month starting as early as next week with a new payout system for income investors. New registrations are being accepted for investors who want to be in a position to start with their first payout next week.

🚀Easy 92% Crypto Dividends (No Coins Required)
COIN stock doesn't pay a dividend... But there's actually a new way to collect a massive dividend that's indirectly based on the stock and offers a terrific monthly income (currently yielding nearly 92% on a forward basis).

🤝Free Advisor Match with Wiseradvisor.com
Don't leave your retirement to chance! Get matched with a trusted financial expert for FREE and make the most of your tax refund. Get started now.

⚠️Dennis Quaid's #1 Warning for Americans
Here's the thing: life doesn't come with guarantees. The economy shifts, markets stumble, and years of hard work could slip through your fingers like sand. But it doesn't have to be that way for you. So request a free copy of this Gold & Silver Guide that will arrive right to your doorstep when you act now.

 

 
 

Follow us on X, Follow us on Twitter