Yesterday may have been a moral victory for the bulls as the DJIA rebounded well off of its early lows, but at the end of the day, it still finished down for the eighth straight day. It was also the first day of the losing streak where the DJIA never traded in positive territory on an intraday basis. It’s still early today, but the DJIA is currently on pace to open modestly in the red once again, and if those declines hold until the end of the trading day, it will be the first time the DJIA has been down for nine straight trading days in over 39 years. A large percentage of people working on Wall Street today weren’t even alive the last time the DJIA had a nine-day losing streak.
The table below lists the ten prior nine-day losing streaks that the DJIA has seen in its history going back to 1896. For each streak, we list the magnitude of the decline in the first nine days, how many trading days the losing streak lasted overall, as well as how the DJIA performed over the following week and month. The longest losing streak the DJIA has ever had was fourteen trading days, which was back in 1941. Like the current period, the DJIA’s decline during the initial nine days back then was very muted (1.51% compared to about 1.9% now). Interestingly enough, of the ten prior streaks where the DJIA was down for nine straight days, more often than not (six times) it went down for a tenth day as well, and half of the time (five times) it went on to decline for at least an eleventh day. Looking at returns going forward, the DJIA’s average one week change following the ninth straight day of losses has been a gain of 0.2% (median: -0.2%), while the average one month return has been a gain of 2.0% (median: +1.6%). If you are looking for the market to snap back quickly from here after nine straight days of declines, it is generally not the norm.