May 13, 2008
Following yesterdays strong advance, the indices were off most of the day. Only the NASDAQ moved ahead, but by a mere .27 percent; the S&P500 lost -.04 percent while the DJIA declined -.34 percent.
With todays close, this diverse pattern the NASDAQ rising and the other two indicators falling- has now occurred six times this year. In 2007, by the middle of May, this one up, two down market action had occurred five times; and 13 times for the whole year.
Counting back, all the way to January 2000, there have been a total of 127 closes, in which the DJIA and the SP500 fell while the NASDAQ moved forward. But these closes are not distributed equally over the past eight years.
In 2000, there were 24, while the S&P500, for example, dropped ten percent. The following year, values fell a further 23 percent, and there were 17 of these one up, two down trading days.
While it is clear that this pattern does not generate a 100 percent relationship with market up and downs the 26 percent advance of 2003 was accompanied by 12 days of this diverse pattern, and in 2004, with 18 such days, the market advanced nine percent.
Nevertheless, it seems advisable to monitor closes for the one up, two down pattern, and while it seems unreasonable to conclude that it signals future declines, this phenomenon bears watching.
DJIA -.34 percent
NASDAQ .27 percent
S&P500 -.04 percent