A seven week losing streak? Do you feel lucky?

Update on losing streaks

Since my post last Friday about what the longest Dow weekly losing streak was (seven weeks since 1971), I found some additional weekly data.  This let me go back to the week of October 1, 1928, or an additional 43 years.  So now I can say that since 1928, or in the last 82 years, the longest weekly Dow losing streak has been (drum roll, please): still seven.

Yes, looking back 43 more years found no streaks longer than seven.  We did pick up just two more streaks of length seven.  (And the number of six week losing streaks went up to 15).  So it looks like the final tally is 5 losing streaks of 7 weeks in 83 years.  There were no streaks longer than seven weeks.

Now of course there are still 32 years missing, being the period between 1928 and the Dow's founding on May 26, 1896.  Maybe one day that data will turn up online somewhere too, but I think we now have a pretty good historical perspective. The historical odds of the Dow ending lower this coming week are 5 in 4264.

I know what you're thinking. "Did the market go down six weeks or only five?" Well, to tell you the truth, in all this excitement I kind of lost track myself. But being as this is a major stock average, the most powerful stock market in the world, and would blow your account clean off, you've got to ask yourself one question: "Do I feel lucky?" Well, do ya, punk?

Let's look at it this way.  You go to Vegas.  To your left is a roulette wheel.  You put your stash on red or black and you know your odds of winning are slightly less than 50-50.  Then you look to your right and you see a  table where everyone is playing Pai Dow Poker.

The odds there are constantly in flux but there's a big sign advertising the current spread: your odds of losing here are just 5 in 4264.  Which one do you put your money on?  The 50-50 roulette wheel, or the 4259 out of 4264 poker game?  Or more to the point - are you going to bet against odds like that?

I guess it all depends on how lucky you're feeling.  Fortunately, we can help our luck a bit by looking at the charts.  I'll post some more on that after the futures start trading this evening.  Stay tuned.