July 25, 2008
While the NASDAQ scored another advance this week, its second in a row, the other two indices lost ground over the previous Friday. Its quite unusual to see this inconsistency: indeed, there are only twelve such weeks, since January2000, with this record.
In considering this disparity, it is significant to note that ten of these weeks occurred during 2000 and 2001, when the market turned down, in the last correction of values. Moreover, there are two periods when these opposing weekly results appeared close together. In 2000, between January and March, there were four such weeks; and in 2001, three came between March and June. And, of course, thats when prices declined.
But it seems too early, to conclude from this pattern, that a further downturn is imminent, for this Fridays pattern was last seen in March 2006.
A similar comment can be made about this Fridays close. The NASDAQ gained 1.33 percent, whereas the S&P500 moved up .42 percent, and the DJIA trailed with a .19 percent increase. That is, the NASDAQ move is about three times as great as the S&P500; and further, that the S&P500 increase is about twice the size of the DJIA.
There have been only 23 such days, since January 2000, sharing this 3-2-1 relationship. Relating these to the direction of the market, twelve occurred during the market adjustment, between 2000 and 2001. Moreover, as with the weekly results described above, these came quite close together. By contrast, nine happened when the market was rising; these incidents were usually more than one hundred days apart.
Since the last occurrence was some 207 trading days ago, on December 26, 2007, an inference about future market direction is not appropriate.
DJIA .19 percent
NASDAQ 1.33 percent
S&P500 .42 percent