Last week I showed how the recent downtrend has shown persistence to a degree rarely seen since the 70’s. Below is another example of the downtrend’s persistence from tonight’s Weekly Research Letter.
This test was run from 1960-present. Only 8 occurrences makes it difficult to draw any solid conclusions. Still, these numbers are terrible. The maximum gain 20 weeks later is only 1.7%! The average loss is over 7% and the average trade lost over 4%. There were only three occurrences since 1988, but none of them were positive. They were 8/24/90, 10/13/00 and 3/2/01. Downside persistence like we’re seeing has historically been bearish.