Archive for January, 2008

Market Takes Another Hit

Wednesday, January 16th, 2008

January 15, 2008


We center our attention not on today’s steep declines in excess of minus two percent, but on the pattern of the last eight trading days. These show four significant drops, well over minus one percent.

Even two reversals, separated by one positive day, are a rare event: happening just six times for the DJIA, 9 times for the S&P500, and some 48 days for the NASDAQ. (See the table below.)

 

recen-large-declines.gif

Going back three more days, reveals that this occurred nine times for the NASDAQ and just two or three times for the other two indices. Moreover, with only one exception, this sequence of major down days has not been seen since 2002.

The record shows that the frequency and magnitude of these declines have been associated with a steep falling off in these security prices. The diagram below reveals the association of daily drops in excess of minus two percent and the decrease in the daily closing price of the S&P500.

It is clear that in the past, such happenings predated significant erosion in these indices.

3-sp500-when-changes-are-less-than-2-pct.gif

The diagram’s yellow line shows the daily closing price of the S&P500. The yellow circle indicates the closing price when its daily decline is two percent or deeper, indicated by the red triangle.

Notice when the market started its sustained growth in 2003 the yellow line climbs uninterrupted by any daily decline of two percent.

Revised January 16, qt 12:15 PM

Market Losses in 2008

Wednesday, January 16th, 2008

January 16, 2008


The losses in the past 11 trading days have taken 8.24 percent off the NASDAQ index, 6.1 percent from the DJIA, and cost 5.11 percent for the S&P500.

While such severe reversals are not usual, they are not unknown. Some 120 of the 2020 closes since January 2000 lost more than 5 percent over an eleven day span. Of these, seven are clustered in January 2003.

The DJIA shows the same pattern for losses deeper than six percent: 59 since 2000 of which five occurred in January 2003.

The NASDAQ, which lost more than eight percent so far this year, had 12 other such declines since 2000, and again these all took place in the month of January.

DJIA -. 28 percent
NASDAQ - .95 percent
S&P500 -. 56 percent

Two Weeks in 2008 – Two Weeks Down

Monday, January 14th, 2008

January 11, 2008

While this week closed down, again, the decline was not nearly as sharp as the first week of the year. Indeed, the losses posted on Friday, January4, were the sharpest of any week since 1950, for the S&P500, since 1978 for the DJIA, and since the inception of the NASDAQ in 1975.

While these data are disquieting, nevertheless, it is not easy to find a relationship between the first weeks of the year and the total change at year’s end. Indeed, the number of negative years –that is, the index was lower at the end of the year than in January- is not large. In the 57 years since 1971, all but nine were negative for the S&P500, and there were 11 such negative years for the DJIA and the NASDAQ.

While the S&P500 never had more positive weeks in January than down weeks, the record for the other two indices does not allow a generalization.

Market Recovery Continues

Friday, January 11th, 2008

January 10, 2008

While the NASDAQ posted another gain, its amount – .57 percent – is just a little better than one half the historical median increase after eight straight declines.

The S&P500 fared better, achieving a close almost equal to its median.

The DJIA did best of all, almost doubling its past median increase for this trading pattern.

In the past, the NASDAQ had only four positive closes on the third day after eight losses; yet all of these occurred before January 2000. On the other hand, the record shows one decline in June 2006.

As for the S&P500 and the DJIA, their histories indicate that upticks happen with the same frequency as declines, for their recent trading patterns.

DJIA          + .93 percent
NASDAQ + .57 percent
S&P500   + .796 percent

Best Day this Year

Thursday, January 10th, 2008

January 9, 2008

Not only did the NASAQ go up today –for the first positive close this year- but its gain of 1.39 percent exceeds the median +.99 percent increase achieved the previous eleven times this index rebounded from eight straight losses.

The S&P500 had its second positive close of 2008; its 1.36 percent increase is in the 90th percentile range for its recent trading pattern.

Similarly, the DJIA gain of 1.16 percent is also in the 90th percentile.

Given the recent pattern of ups and downs, and comparing this to the history of past closes, the chance of another gain for the NASDAQ is only 20 percent greater than for a decline. Yet the median gain in the past has been 1.11 percent, whereas the median decline was only -.09 percent.

The equivalent comparison for the S&P500 reveals a ratio of 28 gains to 11 losses, with the median gain of .86 percent compared to the negative median of -.59 percent.

The DJIA past shows an 18 percent advantage for a next trading day increase, while the magnitudes of the advance and decline are about equal.

DJIA + 1.16 percent
NASDAQ + 1.39 percent
S&P500 + 1.36 percent

NASDAQ Down Again

Wednesday, January 9th, 2008

January 8, 2008

Yes, this is the same headline as yesterday, and now this index has dropped for the eight session in a row. While this long downward string occurred twice in 2006, it’s necessary to go all the way back to 1974 to find a similar long decline.

November 1984 is the last time the NASDAQ fell nine days in a row; and there have been only seven other such long declines.

Finally, a word about January gains and losses. The record shows that the total gains and total losses do not follow a substantial pattern of increases. Instead each of these three indices has its own pattern: the S&P500 scored January increases in only 27 years while it declined in 31 of the past 58 years. Similarly, the NASDAQ has 17 declines but just 16 gains since 1976. The DJIA, though, has a different profile, with 33 increases and just 25 declines in the month of January since 1950. See the table below.

january-percent-changes.gif

DJIA - 1.87 percent

NASDAQ - 2.36 percent

S&P500 - 1.85 percent

NASDAQ Down Again

Tuesday, January 8th, 2008

January 7, 2008

Today marked the seventh uninterrupted decline of the NASDAQ; the first such run since June 2006, and only the fifth since January 2000.

But the other two indices moved up –with the S&P500 posting its first increase in five days. The DJIA also improved, after losing on three of the last four trading days.

While the market performance has been weak today’s changes show some upgrading over the record since the day after last Christmas –see the chart.

01-07-08-changes.gif

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

CONTINUED BELOW

In the last eight years, the NASDAQ had 19 trading days of eight straight losses; that’s exactly the same number of times that this index turned up after seven declines times in a row.

The statistics are similar for the DJIA: 19 increases after its recent closing pattern, and 18 decreases.

The record is not as promising for the S&P500, with only three positive days but nine declines since January 2000.

DJIA + .21 percent
NASDAQ - .21 percent
S&P500 + .32 percent

Year Starts on a Negative Note

Monday, January 7th, 2008

January 4, 2008


The indices fell on each of the first three trading days of the year-after dropping on the last day of 2007.

On Friday, the NASDAQ posted its sixth straight decline, losing 8.8 percent since the day after Christmas. Moreover, these negatives followed six consecutive days of increases, in which the NASDAQ had advanced 5.5 percent.

It is not unusual that the NASDAQ to have such sequences: there have been 66 of these before 2000 and 12 runs of six losing days since then.

There have been four trading days since January 2000, that this index fell for a seventh straight day; while it has posted eight turn arounds, closing positive, after six declines.

Market Drops Again

Thursday, January 3rd, 2008

January 2, 2008

The NASDAQ fell for the fourth day in a row, losing -1.61 percent, turning in the first double decline in the year’s initial two days of trading since 2005. By contrast, this index has closed higher five times in each of the first two trading days since 2000.

As for the next day of trading, the NASDAQ declined five straight days only 30 times since 2000, while rising 122 times after four declines in row.

Turning to the DJIA and S&P500, and treating their near zero percent increases two days ago as negative, these also declined on the last four trading days, an event that occurred less than 47 times since January 2000. As for New Year trading, this was their third double drop in the first two days of trading, compared to two successive increases.

On the next day of trading, both the DJIA and S&P500 posted far fewer five straight negative closes than an increase on the fifth day of trading. For the DJIA, there are 20 declines, but 152 increases, the day after four successive negative closes. The S&P500 has 16 declines compared to 152 increases for the fifth day close.

Posted January 3, 2008, 11:30 AM.

DJIA - 1.67 percent
NASDAQ - 1.61 percent
S&P500 - 1.44 percent