The Signal So Rare It's Happened Just 12 Times in 100 Years

The Dow went 32 straight trading days without consecutive daily losses -- a rare signal in the blue-chip barometer's history

Karee Venema
Dec 28, 2016 at 9:55 AM
facebook twitter linkedin


Last Thursday, the Dow Jones Industrial Average (DJIA) notched its second consecutive daily loss for the first time since Oct. 28. What's more, the Dow had gone 32 straight trading days without a string of multiple losses. Since 1900, there have only been 14 other times when the Dow has gone at least 30 trading days without consecutive down days, according to Schaeffer's Senior Quantitative Analyst Rocky White, and just 12 times in the past 100 years! And while blue-chip stocks have historically underperformed in the wake of a signal, the longer-term trend appears to be to the upside -- hinting at a stronger-than-usual first quarter.

Specifically, in the week after this rare signal has flashed, the Dow has averaged a loss of 0.3%, versus an anytime return of 0.1%. However, the odds of a higher finish are greater post-signal, with the Dow positive 71.4% of the time, compared to an anytime "percent positive" of 55.8%.

Things start to pick up at the one-month mark, with the Dow up an average 1.7% after going 30 straight days without consecutive daily losses -- compared to an anytime return of 0.6%. The strongest returns occur three months out, with the DJIA averaging a post-signal return of 2.7%, versus an anytime return of 1.8%. What's more, the Dow has been positive 71.4% of the time 60 days after the signal, compared to a 61.6% anytime "percent positive."

Dow returns after signal

Below is a list of the 14 other times the Dow has gone 30 days or more without two straight daily losses. While nothing in particular stands out in the summary of returns, the Dow's gain of 11.5% during this most recent streak puts in the middle of the pack.

Dow after consecutive losses

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!

A Schaeffer's exclusive!

The Expert's Guide

Access your FREE trading earnings guide for Q3 before it's too late!


  
 

Partnercenter