Stocks just fell for six days in a row…

That does not happen often.

[ad#Google Adsense 336×280-IA]It wasn’t a big six-day loss – just 1.4%.

But you don’t expect the market to go down for six straight days when it is in an overall uptrend, as it is right now.

So what typically happens to stock prices after a signal like this?

The answer might surprise you…

My friend Jason Goepfert (of SentimenTrader.com) wanted to find out what typically happens after six down days in the market…

He looked back at every time this happened over history. And he uncovered a truly astounding fact. Here’s what he told me…

The Dow has now been down six days in a row, with a small total loss [<2.5%], during an uptrend. Since 1960, this has led to a positive return in the Dow over the next month every time.

Granted, this didn’t happen often over the last 60 years. It only happened a total of 15 times – a couple of times each decade.

But the results were amazing. Again, stocks were up one month later, every single time.

The gains don’t appear to be a fluke…

Stocks were also up six months later in all but two instances. And the story is the same looking one year out.

It’s not often you come across a signal that was right – every time – going back 60 years.

So… should you trade it?

“We’re not reading too much into this,” Jason said.

Well… why not?

It’s because 15 instances – a couple every decade – is not enough evidence to go on. And Jason dropped another important caveat:

“Prior to 1960, [this signal] had the exact opposite connotation,” he said. Prior to 1960, six consecutive down days delivered losses down the road – most of the time.

It is a truly astounding fact – a setup that has been infallible for the last 60 years. However, we aren’t planning on placing any one-month bets because of it…

You are welcome to trade it if you’d like. But to us, it’s more of a “fun fact” than a trading system…

Regardless, we’re in the late stages of a great bull market… And the biggest gains tend to happen at this point. The pattern after six straight down days may just be a fun fact to us, but we already expect that stocks have more upside ahead.

If you’re not invested yet, you should be!

Good investing,

Steve

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Source: Daily Wealth