Coming into this week NASDAQ had recorded five straight
weekly losses. As of Friday’s close, NASDAQ has declined 14.8% during the
current losing streak. Since 1971, NASDAQ has logged 28 previous weekly losing streaks
that lasted at least five weeks. The last such streak was in October and
November of 2012. During that six-week streak NASDAQ shed 9%. NASDAQ’s longest
weekly losing streak lasted 10 weeks in Q4 of 1973 and declined 21.5%. The
worst weekly streak by percent loss was seven weeks in Q1 of 2001 and 32.0%.
Of the previous 28 weekly losing streaks, 14 ended after
five weeks, nine came to an end after six weeks, four lasted seven weeks and
one lasted 10 weeks. Based upon the previous 28 streaks, NASDAQ had a 50/50
chance of extending the streak at the start of this week. Today’s decline is
skewing the odds toward more likely a sixth week.
In the above chart, the 30 trading days before
and the 60 trading days (approximately 3 calendar months) after the weekly
losing streak ended have been plotted. As expected, on average the longer the
streak the deeper the losses. Of note is the general lack of any substantial
rebound after the streak ended.