ES Daily Fib Briefing

History of Nine-Day Market Ramp-Ups Is Encouraging. Mostly.

http://blogs.wsj.com/marketbeat/2011/10/17/history-of-nine-day-market-ramp-ups-is-encouraging-mostly/

By Mark Gongloff

Birinyi

Table of 9-day ramps since 1950. Click for giant image.

Before today’s stumble, the S&P 500 had soared 11.4% in the prior nine trading days, a fairly rare event that typically sets up a much better market in the months ahead — with some notable exceptions.

The analysts at Birinyi Research, a bullish bunch, sent over a — wait for it — bullish table of how the market has performed after past nine-day ramps of 10% or more.

There have been 15 similar moves since 1950, according to Birinyi. The market has been higher six months after 11 of those moves, with an average gain of nearly 10%.

The four exceptions to this track record are cautionary, though. All four have happened since March 2000. The sample size is too small to draw any conclusions, but the positive implications of a 9-day ramp have been hit or miss since the turn of the century.

One of the 9-day ramps in this century was a 12.2% jump in November 2008, which was followed shortly by a brutal selloff that took the market to fresh lows.