Archive for June, 2008

Small Dissimilar, Changes

Monday, June 16th, 2008

June 16, 2008

The three indices went different ways today, with the DJIA falling -.31 percent, the S&P500 staying on the positive side by a mere .01 percent, while the NASDAQ moved higher by .83 percent.

Only four other days have a similar ending: two occurred in 1993, one in 1995, and one in 1999. In the first three instances,  prices were on the rise, while the last one, on June 2, 1999, predated a top by just weeks.

But when the range is widened a bit, including all days on which the S&P500 rises, the DJIA falls, and the NASDAQ gain is between .75 percent and 1.00 percent, the number of such closes rises to 44. Only six of these came between 2002 and 2007.

DJIA -.31 percent

NASDAQ .83 percent

S&P500 .01 percent

Rally Closes Week

Friday, June 13th, 2008

June 13, 2008

Prices, up early, retained their momentum as the NASDAQ gained 2.09 percent,

the S&P500 rose 1.5 percent and the DJIA moved higher by 1.36 percent. These

strong increases, however, were not enough to offset Wednesday’s losses, when

each of the indices fell by more than today’s gains.

There have been ten such days –gains or losses exceeding 1.5 percent- in the 29 days since the Fed’s latest rate cut. All told, there have been 34 of these swings since the beginning of the year, 111 trading days ago. That is, in 30.6 percent of closes in 2008.

This is a much larger share than in the past few years, when there were only 17 percent in 2007, 11 percent in 2006, and 6 percent in 2005.

At the end of the 24th week of the year, all three indices stand below their values on the first Friday of 2008, with the NASDAQ losing -.81 percent and the S&P500 decreasing -.05 percent from a week ago, whereas the DJIA rose .80 percent.

Counting positive and negative weeks, the DJIA leads, with 13 gains and 11 losses; the S&P500 has the exact opposite ratio: 11 gains and 13 losses, while the NASDAQ has only 10 positive weeks, compared to 14 lower closes from the Friday of the week before.

DJIA 1.36 percent

NASDAQ 2.09 percent

S&P500 1.50 percent

Prices Rise – Slightly

Thursday, June 12th, 2008

June 12, 2008

Higher prices dominated the day, and then started to fall, briefly dipping into the red, and then sustaining their plus edge at the close. While the gains were less than one half of a percent, the NASDAQ closed higher for the first time since last Thursday.

However, the NASDAQ index, up .43 percent today, has done much better in the past when recovering after four straight declines. Such closes occurred 28 times since 2000, and their median gain was .77 percent, almost twice as large as today.

This same picture holds for the other two indices as well. The S&P500, coming of three straight declines, edged up .33 percent. That is one half of the median rise of .68 percent, recorded in 77 such closes since 2000.

The DJIA gain of .48 percent is a bit smaller than its median of .58 percent for the 300 times it closed higher after a negative gain.

DJIA .48 percent

NASDAQ .43 percent

S&P500 .33 percent

Market Drops Again

Wednesday, June 11th, 2008

June 11, 2008



The NASDAQ lost more than two percent, whereas the other two indices dropped almost -1.7 percent. This was the second large decline hitting stocks over the past four days. And the two days in between offered no chance of recovery with their fractional moves on Monday and Tuesday.

NASDAQ’s negative close is now its fourth decline over the past four trading days. Consider the number of such four in a row down days have been posted by this index since 1995. This date marks the start of a large appreciation in the NASDAQ, lasting till March 2000. While this may have been the result of the .com boom, nevertheless there have been two major peaks and one significant trough in the past thirteen years. (See the Figure below.)

nasdaq-cycles.gif

 

 

 

 

 

 

 

 

 

 


Concentrating on the number of closes with fou-in-a-row- down-days and relating these to the overall up or down trend of the NASDAQ, a noteworthy pattern appears. As shown in the table below, the percentages are related to the direction of the index.

 

new-nasdaq-minus-four-table.gif

 

A rising NASDAQ trend has 2.48 percent and 2.28 percent. four-in-a-row-down-days, while there were 3.91 of these when the index fell between 2000 and 2002.

Looking at the current period, we see that since the last crest, in October 2007, the number of four-in-a-row-down-days amount to 2.65 percent of the total. A ratio that is less than registered in the 2000/2002 downturn, yet larger than in the two upturns.

DJIA -1.67 percent

NASDAQ -2.24 percent

S&P500 -1.69 percent

Another Diverse Day

Tuesday, June 10th, 2008

June 10, 2008

For the second time this week, the three indices failed to change in their typical, uniform manner. On Monday, the NASDAQ fell while the other two indices rose. Today, the NADAQ and the S&P500 fell, while the DJIA closed higher, as it did yesterday.

Moreover, the percentage changes in all three indices stayed relatively small on both days, quite contrary to Friday’s major declines, of, or greater than, minus three percent.

The S&P500 has had alternate up and down days since Thursday of last week. The period between 1950 and the end of 1999 experienced 180 strings of this kind; there have been 70 between 2000 and 2007, and five so far this year. As for the 2008 experience, the following day has been negative twice, and positive three times.

The DJIA daily close pattern is different: today was the second decline in a row, with alternate up and down days before, and an earlier four straight negative closes.

Finally, the NASDAQ fell today –its third successive loss in as many days. Previous to last Friday, it had two straight gains, following the two consecutive losses of last Monday and Tuesday. While there have not been any of these chains this year, there were, however, ten such series between 2000 and the end of 2007. Only three of these turned positive the following day, while the seven others turned negative.

DJIA .07 percent

NASDAQ -.43 percent

S&P500 -.24 percent

Small Changes Follow Friday’s Drop

Monday, June 9th, 2008

June 9, 2008 PM Post

The NASDAQ, in the red all day, closed off just -.61 percent; whereas the DJIA and the S&P500 managed small advances, after Friday’s sell off.

Today was the seventh occasion, in 2008, for these three indices to have this type of divergent day: the DJIA and the S&P500 rising while the NASDAQ declined. Altogether, since the beginning of 2000, these have totaled 135.

The median changes for these days tend to be small, and they are quite similar in magnitude before and after 2008. The NASDAQ median decline over the seven incidents of two indices up and one index down this year, before today, is -.26 percent. The median gain, on those days, for both the DJIA and S&P500 is .32 percent.

As for these adjustments, after Friday’s three percent decline, that occurred today note that they are quite modest compared to the historical ranges described in this morning’s post.

DJIA .58 percent

NASDAQ -.61 percent

S&P500 .08 percent

The Day After a Minus 3 Percent Close in History

Monday, June 9th, 2008

June 9, 2008

In the past nine or so years, how did these averages change at the end of the next session? Their record will not reveal how they will open, or behave, today – but it will generate a perspective on the market activity to come.

Of the S&P500’s 18 such days since January 2000, 11 showed gains while 7 ended even further down. The range of closing prices, however, is quite large, going from a loss of -3.29 percent to a recovery of 3.31 percent.

The DJIA, with 15 closes deeper than three percent, continued with five negative closes and ten increases, running from minus -2.93 percent to plus 2.87 percent.

The NASDAQ situation is difficult to ascertain, since this index, with some 100 days of minus three percent or greater losses, had only three such closes since 2004.

Worst Decline in Five Years

Friday, June 6th, 2008

June 6, 2008


Blaming this ‘Black Friday’ on the run up in oil prices or the increase in the unemployment rate is tempting, but the day started with stock prices heading down toward the minus one percent level almost from the opening bell.

The last time the DJIA and the S&P500 lost more than three percent in one day was on March 24, 2003. Today’s trouncing was not as bad: the DJIA fell -3.13 percent and the S&P500 dropped 3.09 percent.

The NASDAQ decline was a more moderate -2.96 percent; nevertheless, it’s the steepest since September 2003; when the number was -3.05 percent.

To summarize, there are just two days since January 2000 that the DJIA lost more in one day; and only three for the S&P500. The NASDAQ, on the other hand, even when correcting for the web excesses, fell deeper than -2.96 percent ten times in this century.

As for the weekly comparison, the NASDAQ was off -1.91 percent from last Friday; yet it was its eighth’s worst week of the year. The S&P500 dropped -2.94 percent, scoring its sixth’s deepest decline in 2008. But the DJIA’s weekly decline is poorest of all: losing -3.38 percent, the fifth poorest performance of the year.

DJIA -3.13 percent

NASDAQ -2.96 percent

S&P500 -3.09 percent

Strong Turnaround

Thursday, June 5th, 2008

June 5, 2008

The market started high today, and maintained its momentum, allowing the S&P500 to rise 1.95 percent, the NASDAQ to gain 1.87 percent, while the DJIA closed up 1.73 percent.

There have been just seven other days in 2008 when the DJIA and the S&P500 shot up this much, although there have been close to 100 days since January 2000 when this same or greater increase occurred in a single session.

The NASDAQ has a stronger history of such large gains: ten earlier ones this year, and some 244 closes in this century.

It was the first up close for the DJIA in four days - this index has fallen five days in a row only 21 times since 2000. Similarly, the S&P500 recovered after three straight decreases; it has just 44 occasions, in this century, when the string of daily decreases extended to four days.

In the past, since 2000, after a gain in excess of 1.8 percent, the NASDAQ went higher 31 times, but fell 30 times on the following day. A comparable record exists for the S&P500, with 39 increases and 30 decreases the next day; the DJIA’s record is even weaker, with only 11 further expansions compared to 18 declines the next day.

DJIA 1.73 percent

NASDAQ 1.87 percent

S&P500 1.95 percent

Prospects as a Mainly Positive Day Turns Down

Wednesday, June 4th, 2008

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&P500’s 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