USMarketView

June 27, 2008

It was another bad week, differing only in that it was Thursday, instead of the Friday before, that prices tumbled from the opening bell. Today, however, the losses were moderate, by the end of the day the NASDAQ was off -.25 percent, the S&P500 by -.37 percent, while the DJIA was the worst performer, losing -.93 percent.

The DJIA dropped -4.19 percent this week, its fourth loss in the past six weeks. While the size of the loss drew much attention, the more important reality is that of frequency: this is the fourth time this year that the index plunged more than minus four percent in a week. Indeed, the DJIA lost -4.23 percent in the opening week of 2008.

Despite the market recovery since March, prices are now in regression to their earlier level this year. In the past six weeks, the NASDAQ and the S&P500 have been down five times. And those losses are far steeper than the solitary positive gain.

The appropriate focus is not just on the size of the losses, but also on their frequency. The S&P500 lost more than minus four percent per week some 21 times since January 2000, yet only two of these occurred during the long upswing from 2003 that ended only last year. The others populated the decline of 2001.

The DJIA and the NASDAQ have the same profile: its not that four weekly losses in a row are not seen in a rising market; it’s their preponderance in a bear market that requires our attention.

DJIA -.93 percent

NASDAQ -.25 percent

S&P500 -37 percent

Posted June 29, 10:00 AM

This entry was posted on Sunday, June 29th, 2008 at 12 082008000000Sun, 29 Jun 2008 08:53:39 +0000 and is filed under Market Report. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.