June 4, 2008
All the gains started to disappear by 2 P.M., and while the NASDAQ ended higher by .91 percent, the DJIA and the S&P500 failed to make it back to positive territory, declining -.10 percent and -.03 percent, respectively.
The NASDAQ positive close follows two straight losses, while the DJIA now has four negative days in a row, whereas today was the S&P500s third day in the red.
These two, separate happenings do not -or did not in the past- promise good prospects for higher prices.
When the market is headed down, as in 2000 to 2003, there are far more closes with NASDAQ gains and simultaneous losses for the other two indices. There were 24 of those in 2000, when the S&P500 fell some 10 percent. In 2001, this index lost 13 percent while there were 23 positive NASDAQ days on which the other two indices declined.
By contrast, when the S&P500 gained 26 percent in 2003, the number of days with higher NASDAQ closes but declines in the S&P500 as well as the DJIA fell to 12.
Turning to the third straight decline in the S&P500, note that over the years 2000 to 2002, when the yearly losses ran to -10 percent, -13 percent and minus 23 percent, respectively, there were 55 occasions on which the index suffered three reversals in a row. But in the next three years, when the annual gains came to 26, 9 and 3 percent, respectively, these were paired with just 10, 13, and 12 days of three in a row losses.
DJIA -.10 percent
NASDAQ .91 percent
S&P500 -.03 percent