The Real Signs of an Intraday Rally

I ran a screen, with some help from my team at TheStreet.com, Dave "The Straight Man" Peltier and Mike "Diablo" Comeau -- and I have the numbers, the real, empirical, Bill James-style (if you're into baseball) proof that you just aren't gonna get an intraday rally. On days the Dow was down at least 0.5% in 2000, the market ended up only 9.1% of the time. In 2001, it was 17.7%. In 2002, 15.3%. In 2003, 13.9%. But then we get to the current market and things go south. In 2004, on days when the market was down 0.5%, it ended up only 6.3% of the time. Last year, it came back up into the black just 4.4% of the time, and so far in 2006, on the days the Dow's been down 0.5% or more, we've ended positive only 3.8% of the time.

Do you want to bet on those numbers? You can't argue with them; intraday rallies are rare, and you can't expect or rely on them. If you do, I can almost promise, except for the legal department, that you will lose money.

And the picture gets even worse. It's hard to reverse course from a day when the Dow is down at all, down by anything, down by next to nothing. There have been only 14 days so far this year that the Dow has rallied 90 or more points from its low of the day to the close. I can't make this any more clear: These numbers don't lie! The percentages are just so against you that you can't bet on a quick turn in the market. Take off your rally cap, guys, and stop hoping, because hope is not part of the equation. Leave it at the stadium or your house of worship of choice.

But Cramer's not gonna leave you with that weak takeaway. So intraday rallies are rare. That doesn't mean we can't call them; we just need to know what to look for.