USMarketView

April 16, 2008

Stocks soared today, and the NASDAQ, rising 2.8 percent, scored its third greatest advance of the year. The DJIA and the S&P also did well, increasing 2.08 percent and 2.27 percent, respectively, marking their fourth best day of 2007.

Looking at the past, to evaluate just how good this performance is, we see that the S&P500 had just 34 trading days, since January 2000, with gains in the 2.0 to 2.5 percent range; the DJIA had a few less: 32 all told. But the NASDAQ did far better, closing in the 2.75 to 3.00 percent range a total of 88 times in this century.

Such good news could turn out to be a signal of further stress ahead, when the incident of these advances is factored into the evaluation.

Look at the NASDAQ: 77 of its 88 sizable gains occurred during 2000 and 2002. That’s when the market imploded, with the NASDAQ plunging from its high of 5048 to 1114 on October 9, 2002.

Similar, if not identical negative spirals hit the DJIA –with 21 of its 32 plus two percent gains in that same period of disastrous losses. Of the S&P500’s 34 closes between 2 and 2.5 percent, 20 took place as this index lost almost half its 1527 high, before hitting a low of 776 in the third quarter of 2002.

So we ask the fundamental question today: Does this performance portend good or bad times ahead?

DJIA 2.08 percent

NASDAQ 2.80 percent
S&P500 2.27 percent

April 15, 2008

While the marked closed higher, for the first time in three trading days, the gains amounted to less than one half percent. Yet, with the exception of the NASDAQ rise of 1.27 percent last Thursday, today’s small increases are the largest since April 1.

Since the last peak, on October 9, 2007 for the DJIA and the S&P500 – 129 trading days ago – these indices have lost -12.7 percent and -14.7 percent respectively. The NASDAQ after reaching its top a few days later, on October 31, has dropped -20 percent in 113 trading days.

In comparing these DJIA results with the decline that started toward the end of 2000, it turns out that the loss then, 129 days from that peak, was only -5.3 percent. But the S&P500 loss at that time was much steeper: -18.9 percent. Of course, the NASDAQ, reflecting the bust of its bubble, was down by -41 percent.

DJIA .49 percent

NASDAQ .45 percent

S&P500 .46 percent

April 14, 2008

The indices stumbled again, making today the fifth losing close in the past six trading days.

This year, so far, has seen more negative than positive closes. The ratio of down to up days, is 36:32 for the S&P500, 37:31 for the DJIA, and 38:30 for the NASDAQ.

This is in stark contrast to last year’s first 68 trading days. The S&P500 closed down on only 30 days — six fewer negatives than this year. And the DJIA and NASDAQ comparisons show an even smaller number of losing days: just 27 — but these indices scored 41 positive days.

The losses between December 31, 2007 and today, amount to -14.2 percent for the NASDAQ, -9.5 percent for the S&P500 and -7.3 percent for the DJIA.

DJIA -.19 percent
NASDAQ -.63 percent
S&P500 -.34 percent

April 11, 2008

All three indices lost more than two percent today, as the NASDAQ went down for the fourth session of the week. This is its worst performance since dropping -3.07 percent on February 5. The DJIA and the S&P500 did little better, but still suffered reversals deeper than any since March 19.

As for the week’s results, it was the ninth negative since the beginning of the year for the NASDAQ and the S&P500; the DJIA has lost ground in eight of the 15 weeks since January 4, 2008.

In that time, the NADAQ has dropped -8.5 percent, the S&P500 -5.6 percent and the DJIA -3.6 percent.

DJIA -2.04 percent
NASDAQ -2.61 percent
S&P500 -2.04 percent

April 10, 2008

While the NASDAQ advanced 1.27 percent today, closing with a gain for the first time this week, it, nevertheless, still has not recovered to the level reached on the first of this month.

Today’s positive close comes after three successive negative sessions. This is the fifth time this year, that the NASDAQ has followed this pattern of daily change – one up day/following three declines. Since January 2000, there have been 63 other cases, with the identical pattern of daily change; their median increase is 1.27 percent, the same as today’s performance.

The advances of the DJIA and the S&P500 come after two successive negative closes. The record shows that there have been about 135 other trading days with the same pattern. The median of these for the S&P500 is .77 percent, and .63 percent for the DJIA, substantially more than their gains today.

Looking at the past, for the changes on the day following this pattern, these two indices have as many down days as up days after this regime of a higher close/after two days of decline.

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DJIA .44 percent
NASDAQ 1.27 percent
S&P500 .45 percent

April 9, 2008

With only two positive closes in the past six sessions, the NASDAQ declined most of today, to close off another -1.13 percent; meanwhile the DJIA and the S&P500 also fell, but just for the second time in as many days.

Consider the S&P500’s performance since last August and today; in the last 159 trading days, it had 19 of these two-in-a-row negatives. That means 11.9 percent of all sessions were in the red two days in a row. Moreover the median loss on the second day, of -.84 percent, is just about the same as today’s -.81 percent decline.

In contrast, during the previous expansion, from the trough of 2002 to the fall of 2007, only 9.9 percent of the 1327 trading days were two-in-a-row-negatives; and that median loss was limited to -.55 percent. Moreover, in the preceding decline, 14.6 percent of the 676 trading days were double day losers, and that median loss, at -.84 percent, was the same, -.84 percent, as the one between last fall and today.

As for three down days in a row, there have been seven of these, or 11.8 percent of all closes since the peak of last August; that compares to 7.2 percent of triple down days in the earlier decline that ended in October 2002.

DJIA -.39 percent
NASDAQ -1.13 percent
S&P500 -.81 percent

April 8, 2008

Today was negative from the start; the NASDAQ lost .6 percent, followed by the SP500, off .51 percent, whereas the DJIA lost .29 percent.

The DJIA and the NASDAQ had only two positive closes in the past five trading days, while the S&P500 managed three up days. In fact, the DJIA has been moving up, then down, alternately, since last Wednesday.

One positive upshot, relating today to the past, is that the median decline for this pattern, since January 2000, is -.64 percent, more than twice as deep as today’s shortfall of -.29 percent.

Relating the S&P500’s pattern to previous runs of one negative/following three positive days, to what might be in the offing for tomorrow; there are 26 incidents of a further loss contrasted to 39 cases of a positive day thereafter.

DJIA -.68 percent
NASDAQ -.29 percent
S&P500 -.51 percent

April 7, 2008

The day’s strong gains failed to last to the close, as the NASDAQ fell -.26 percent, and the DJIA was limited to increasing just .02 percent. Thus the S&P500 became the star performer, up .16 percent at the close.

Since January 2000, there have been 130 such trading days: the NASDAQ falling while the other two indices were rising. Moreover, the median changes in the past are quite close to today’s, with the median NASDAQ decline of -.31 percent, and the median gains of the S&P500 and DJIA of .22 percent and .39 percent respectively.

The market has displayed significant stability since last Tuesday’s increase. The DJIA had the largest movement, losing -.33 percent, compared to the S&P500’s gain of .17 percent and the NASDAQ overall change of plus .09 percent.

DJIA .02 percent

NASDAQ -.26 percent

S&P500 .16 percent

April 4, 2008

Gaining 4.86 percent since last Thursday, the NASDAQ had the best week of the year, handily beating the previous high of 3.75 percent, reached for the week ending February 1. Yet today’s close was only its fifth positive week of 2008. The NASDAQ, so far this year, reported eight negative weeks and one week with no change.

The S&P500 record is better; by rising 4.2 percent since last Thursday, it scored the sixth positive week this year, against eight losses. It was not its best showing of 2008, however, falling behind its best increase of 4.87 percent of the first of February.

Of all the indices, the DJIA actually owns the best weekly performance, with an equal number of up and down closes: seven of each. Yet today’s 3.22 percent falls below the 4.39 percent increases of February 1 as well as March 20^th, 3.43 percent.

Today’s figures are similar to Thursday, with only small gains for the NASDAQ and S&P500, while the DJIA declined -.13 percent.

Clearly, the overall advance this week results from Tuesday’s strong, near record breaking activity.

DJIA -.13 percent
NASDAQ .33 percent
S&P500 .08 percent

April 3, 2008

At the final bell, stocks were almost unchanged. While the indices managed to close fractionally higher, their gains were substantially below the median for the trading pattern of the past four days.

The recent past of the market can be characterized as plus one/minus one/plus two – that is, up today(that’s plus one), down yesterday (minus one), and closing higher on the previous two dates (plus two).

In comparing today’s S&P500 advance of .13 percent, with the 80 such previous incidents of this pattern since January 2000, we find that its increase is less than a third of the historical .72 percent median.

Moreover in the past, on the day following this pattern, the S&P500 increased on 32 occasions and declined 48 times.

The comparison for the NASDAQ is similar: today’s change of .08 percent is much smaller than the median gain of .98 percent. As for the next day, there were 40 advances and just 30 declines, in the 70 times that this pattern was displayed by the NASDAQ.

The DJIA gained .74 percent today, compared to the median .79 percent, but declines outnumbered advances for the next trading day, 44 minus days to the 38 positive closes on the next day.

DJIA .14 percent
NASDAQ .08 percent
S&P500 .13 percent