Archive for May, 2008

A Solid Day

Thursday, May 15th, 2008

May 15, 2008

In positive territory all day, the market closed with solid gains; the NASDAQ advancing for the fourth day in a row, increased 1.48 percent. The S&P500 and the DJIA chalked up their second positive day in succession, moving ahead by 1.06 percent and .73 percent, respectively.

It is the NASDAQ’s second fourth in a row days this year. In all, there have been only 65 such runs since January 2000. And while the median gain for these days is only .69 percent, today’s near 1.5 percent rise is a strong advance, placing this change in the 75th percentile.

The S&P500 also did well today; its 1.06 percent increase places this close also in the 75th percentile of all closes occurring two days in a row.

The DJIA also gained its second positive day in a row, but its .73 percent advance is only a bit higher than the median of .60 percent for this trading pattern.

DJIA .73 percent

NASDAQ 1.48 percent

S&P500 1.06 percent

Prices Stay Up

Wednesday, May 14th, 2008

May 14, 2008

Although the averages advanced more than one percent during the day, they failed to maintain their gains at the close. While the DJIA finished up .52 percent, and the S&P500 held on to .40 percent, the NASDAQ change barely stayed in the positive, up just .06 percent at the close.

Even though the daily advances are far from large, and while they are intermixed with frequent correction, the indices have risen substantially since their most recent low on March 10.

The NASDAQ close today is 15 percent above that bottom, achieving this increase in just 46 trading days. Similarly, the S&P500 has gained 10.6 percent and the DJIA moved up 9.9 percent in that period.

It’s quite easy, with these sharp gains, to postulate –or is it, hope- that the decline has corrected itself, and stock prices will continue to move higher, despite much negative economic news. That now, just 150 trading days after prices peaked last October, the market is in for some robust growth.

But a look at the last major decline, the 2000/2002 experience, reveals that it took 741 trading days for the recovery from that trough. It also exposes that the upturn was not at all smooth, nor even continuous. For example, the market required 259 trading days to return to its earlier peak, only to drop three more times, over the next year and a half, before the trend turned positive and growth became the major trend.

DJIA .52 percent

NASDAQ .06 percent

S&P500 .40 percent

Market Retreats a Bit

Tuesday, May 13th, 2008

May 13, 2008

Following yesterday’s 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 today’s 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

Indices Gains Exceed One Percent

Monday, May 12th, 2008

May 12, 2008

                                                                             

The NASDAQ advanced  1.76 percent today, with the S&P500 and the DJIA moving more modestly, but still going up 1.1 percent and 1.02 percent, respectively.

This is the 16th increase in excess of one percent this year for the S&P500, and comes just seven days after its last previous occurrence on May 1.  While the other two indices also shared May 1 as their last, greater than one percent increase, for the NASDAQ, today is its 18th such advance this year, and for the DJIA the 14th event in 2008.

It is now 39 trading days since the most recent low point of these averages was posted on March 17, and during this period, the S&P500, for example, increased more than one percent on seven occasions.  Contrasting with the 51 trading days between March 16 and January 2, there were ten days of gains greater than one percent.

Therefore, the difference in the number of trading days per a rise of more than one percent, is quite small: 5.6 days since the trough and 5.1 days before the trough.

However, there is a substantial difference in the performance of these two periods: the S&P500 gained    9.9 percent in the last 39 days, while it lost 11.8 percent between January 2 and March 17 of this year. 

DJIA                                     1.02  percent

NASDAQ                             1.76  percent

S&P500                                1.10  percent 

Negative Week Stops Positive Momentum

Sunday, May 11th, 2008

May 9, 2008

Today’s decline was the third this week, that together with Wednesday’s sharp reversal, set the stage for the averages to post their first negative week since April 18.

So after three weeks of successive higher closes, we have to factor in a step down step; in terms of magnitude, however, the results were not as offsetting as in earlier weeks. The DJIA’s fall was the fourth worst weekly performance, of its nine negative weeks, of 2008.

Similarly, the NASDAQ and the S&P500 declines were their third poorest of the year.

Possibly, the most optimistic viewpoint at this juncture is to note that these unwelcome results, nevertheless, left all three indices well above their lows of four weeks ago. Moreover, the line connecting the reversals in these weekly closes, from their 2008 trough of March 7, projects far below today’s closes.

While that’s not the best news, it should be noted in addition, that today’s closing prices remain substantially above the levels existing when the current recovery started in the eleventh week of the year.

DJIA -.94 percent

NASDAQ -.23 percent

S&P500 -.67 percent

Note: A computer hang up caused the cancellation of the Thursday and Wednesday blogs this week; this, Friday’s, blog was published on May 11.

Computer Problems–Post Will Continue Soon!

Thursday, May 8th, 2008

Market Edges Higher

Wednesday, May 7th, 2008

May 6, 2008


Today’s increase in the NASDAQ was .78 percent; the S&P500 gained
.77 percent, while the DJIA moved up .40 percent.

Looking at the past, since January 2000, of the 426 Tuesday trading dates, these indices closed higher slightly more than half the time. On Tuesdays, the NASDAQ scored gains 52 percent of the time. The same rate as the positive closes of the DJIA. The record of the S&P500 is not much different, with 51 percent of its Tuesdays closing higher.

DJIA              .40 percent

NASDAQ       .78 percent

S&P500         .77 percent

Market Turns Down

Monday, May 5th, 2008

May 5, 2008

The week opener featured a down ride for most of the day; at the end the DJIA lost -.68 percent, the NASDAQ -.52 percent while the S&P500 retreated -.45 percent.

Today was the second successive negative post for the NASDAQ; it, more than the other two indices, has a recent pattern of up and down closes on alternate days, with the longest run of three successive days occurring on April 9. And that was for three negative closes in a row. To find the last time that the NASDAQ had three positive closes in a row, one has to go back all the way to March 25.

Both the DJIA and the S&P500 closes, more often, persist in the same direction for three and four days in a row, be they negative or positive.

On Mondays, the market tends to move higher more often than it declines, even though that difference may not be very large. Of the 391 trading Mondays since January 2000, the S&P500 had only 187 previous negative days but 204 positive closes. That is, the S&P 500 turns down on 48 percent of all Mondays.

The NASDAQ history shows a similar if slightly larger proportion of losing Mondays; 49 percent in this decade.

The DJIA has the fewest negative Mondays; just 181 to the 187 of the S&P500 and the 192 of the NASDAQ; making the DJIA ratio of 46 percent the best Monday performer of the three.

DJIA -.68 percent

NASDAQ -.52 percent

S&P500 -.45 percent

Note: This blog has changed its name to USMarketView.com to define its mission more accurately.

Week Closes Higher after Fed Rate Cut

Sunday, May 4th, 2008

May 2, 2008

Friday’s closes were higher than a week ago, with the daily NASDAQ off a bit and the DJIA and S&P500 rising less than .4 percent for the day. Thursday’s market escalation, after the Fed cut its fed funds rate a day earlier, dominated the action.

It’s possible to become quite optimistic,when looking at the price achievements of the past few weeks. Indeed, this Friday, the indices extended their weekly advance to three weeks in a row.

In this 18th week of 2008, the S&P500 finally closed higher than on the first Friday of the year. Although the NASDAQ now has moved up six times over the last eight Fridays, this index is still about a percent below its price at the beginning of 2008.

The DJIA, however, surpassed its beginning of the year level three weeks ago; its weekly trough occurred on March 7, some eight Fridays ago, and since then has only two weekly declines.

At this point, looking backwards, the bottom of the recent decline can be isolated at the levels of March 7 and March 14. And while the market still has its weekly ups and downs, since those dates, the successive closes and percent advances, when the weeks ends on a positive note, are above the previous best 2008 results for all three indices.

DJIA .37 percent

NASDAQ -.15 percent

S&P500 .32 percent

Strong Market Day After Fed Rate Cut

Thursday, May 1st, 2008

May 1, 2008

Contrary to Wednesday’s rather small declines, the day the Fed cut the fed funds rate, the indices soared today. The NASDAQ was the star performer, closing up 2.82 percent, while the S&P500 increased 1.71 percent, and the DJIA coming in last, nevertheless, gained 1.48percent.

As noted yesterday, the indices have a 50/50 performance on announcement day. However, when the index response, in the past, was negative when the Fed cut the fed funds rate, on the following day -for example, as Thursday was the day following the latest rate cut- the duplicated their 50% increases and 50% decreases response ratio, but in the opposite direction.

Typically, when the index declined on announcement day, it gained on the day following the Fed’s declaration. And that is what happened this week.

Looking at the past, a similar pattern of alternating up and down closes is evident for the second day following a fed fund rate cut. That is, relating this sequence to tomorrow, these indices could reverse again, moving down instead of up.

DJIA 1.48 percent

NASDAQ 2.82 percent

S&P500 1.71 percent