Archive for July, 2008

Market Soars

Thursday, July 17th, 2008

July 16, 2008

Up by 3.12 percent, the NASDAQ gain is unusually large for a single day.

There have been only 86 such closes in the 2,145 trading days since January 2000. And just 16 of these were in the range of 3.0 to 3.25 percent.

Equally atypical are the 2.51 percent increase of the S&P500 and the 2.52 percent move of the DJIA.

In fact, this is the sole close, since 1950, when all three indices increased by these amounts on the same day.

Placing these gains in historical perspective, it is seen they have occurred mostly when the averages are falling, or are at the bottom and on the way up. This tendency, for the S&P500 as an example, is seen on the graph below. The vertical lines extending from the time axis indicate when the daily increase of this average was in the 2.50 to 2.75 percent range.

sp500-vlines-at-2-and-25-percent-2000-2008.gif

 

Looking at the next day, in the past and since January 2000, when these indices increased by the amounts discussed above, the NASDAQ moved up ten times and fell six times.

The S&P500 on the day after gains between 2.5 and 2.75 percent, fell four times and increased three times. The DJIA, also in this 2.5 to 2.75 percent range, had six negative closes and only four increases.


DJIA 2.52 percent

NASDAQ…… 3.12 percent

S&P500 2.51 percent

NASDAQ Rises on a Mostly Negative Tuesday

Wednesday, July 16th, 2008

July 15, 2008

While the market opened down, the indices were rising all day; but only the                           NASDAQ closed up, but barely so, gaining just .13 percent. The S&P500, however, lost -1.05 percent whereas the DJIA dropped -.85 percent.

This makes it the seventh occasion in this year for such a divergent pattern. Last year there were twelve such days, with five coming after the market turned down in August.

Indeed, there is a correlation, albeit a weak one, between the level of the S&P500 and the annual number of these divergent closes. In 2001, when the index fell -13 percent, this decline was accompanied by 22 days of gains in the NASDAQ while the other two indices declined. But in 2003, there were just 11 such differing days while the overall level of stock prices gained 26 percent.

DJIA -.85 percent

NASDAQ…… .13 percent

S&P500 -1.05 percent

Week Opens Down

Tuesday, July 15th, 2008

July 14, 2008

NASDAQ’s decline today marks the fourth Monday in a row that this index has opened the week with a loss. Since the beginning of May, the NASDAQ has fallen in seven of the past ten Mondays.

The S&P500’s and the DJIA records are somewhat better, with today’s markdown being their second consecutive Monday decline; but the S&P500’s performance on Mondays since May 2008 is the best of these indices, with only four losses whereas the DJIA fell on six

Another continuing characteristic is the continuing pattern of alternate up and down days. Consider the S&P500 record since June 17. This index reversed its direction on fifteen days, and has just three occasions when prices moved in the same direction two days running.

The DJIA has a comparable situation, with only two days of price changes in the same direction, but ten days of alternate up and downs since June 25. Moreover this index had a similar run between May 5 and May 27: in those 18 days the DJIA had only three changes in the same direction, but there were 15 occurances where DJIA changed direction every day.

DJIA -.39 percent

NASDAQ……- 1.06 percent

S&P500 -.94 percent

NASDAQ and S&P500 Fall Sixth Week in a Row

Sunday, July 13th, 2008

July 11, 2008

This Blog Covers Week Ending July 11

Since May 30, these indices failed to post a positive week; instead they have fallen in each of the last six weeks. The NASDAQ has lost -11.2 percent in this period, whereas the S&P500 declined -11.6 percent. While the DJIA’s string of losses is shorter –only four, since it rose in the week ending June 13– it nevertheless dropped the greatest amount, -12.2 percent in the last six weeks.

The only good news in the latest data is that this week’s NASDAQ decline of -.28 percent is its smallest loss since the week ending May 30, and also its smallest weekly loss of 2008.

As a result, both the DJIA and the S&P500 are now below their weekly low point of this year, reached in the beginning of March. Moreover, Friday’s close is their lowest price since July 2006 — when both indices were rising. The NASDAQ, although it is still above this year’s low, is in similar circumstances, with the current close about where it stood in September 2006.

There have been just two times, before this Friday, in this century that the S&P500 fell six consecutive weeks. Both were followed by significant declines in market prices.

Going back to 1950, there were 14 such incidents; and all but two were followed by falling prices.

As for the next week, there are just four instances where the S&P500 fell seven weeks in arrow: in 1962 and 2001, these weeks were followed by declining prices; while in 1970 and 1980, prices fell further, but then started a substantial recovery.

Friday to Friday Change
DJIA -1.67 percent

NASDAQ……..- .28 percent

S&P500 -1.85 percent

DJIA andS&P500 Alternate Up and Down for 11th Day

Saturday, July 12th, 2008

July 11, 2008

This Post Covers July 8 through July 11

Today’s decline continues the pattern of daily reversals of direction, occurring since July 2. Indeed, if the NASDAQ is added to the comparison, the market has now completed its tenth sequence of up,down,up,down days in 2008. Seven of these happened when these indices were on the way down, while two coincided with a lower turning point, as prices started to rise.

All told, there have been 75 of these chains in the 2,142 trading days since January 2000. Moreover, they tend to occur in clusters, after which price changes are more random. In 2007, for example, November saw four such sequences, and two in July, while one occurred in January, May and June.

It would be rewarding to find these sequences related to changes in the market’s direction, but the record fails to reveal such a relationship. For example, in the last eight years, there were as many in years when prices were rising as in years when they declined.

Turning to what might happen on the day after a up,down,up,down days sequence, there is no indication in the past data. So far, in this decade, the NASDAQ and the S&P500 had 39 increases and 35 price decreases on the next day. It might be tempting to cite the DJIA result to forecast a positive next day, for that index had 41 increases compared to only 33 declines. But such a conclusion seems precarious in the light of the randomness of the data.

NASDAQ, S&P500 Off Fifth Week in a Row

Saturday, July 5th, 2008

July 3, 2008


The NASDAQ declined -.27 percent, finishing in the red for the third time in this foreshortened week of four trading sessions. The DJIA gained .65 percent whereas the S&P500 rose .11 percent on Thursday.

On the day before Independence Day, in the previous eight years, since 2000, the NASDAQ closed higher five times and declined three times. In those three negative years, it declined twice on the next trading day.


The DJA and the S&P500 have the same record on the day before, but the DJIA had three declines on the following day, while the S&P500 fell twice.

Both the NASDAQ and the S&P500 have now ended the week lower than the week before for five straight times. It was the second time this year for the NASDAQ, but the 13th such occasion since January 2000.

It was a first the S&P500, but the 11th time in this century. The time graph below, shows that such strings of five weekly losses in a row have been clustered when the index experiences a long and substantial decline.

five-friday-closes-in-a-row-2000-on.gif

DJIA .65 percent

NASDAQ -.27 percent

S&P500 -.11 percent

Posted July 5, 2008

S&P500 Hits New 2008 Low

Wednesday, July 2nd, 2008

July 2, 2008


Falling by -1.82 percent, the S&P500 closed at 1261.52; its price has now regressed beneath the previous low of 1273.37 hit on March 10, 2008. The DJIA crossed this same benchmark four trading days ago, on June 26, and after managing miniscule gains for two days, it dropped today to 11216.49.


Only the NASDAQ remains above its mid March low. But even this index has been on a slide since mid June, when it closed at 2474.78. In the intervening 12 trading days, it has declined to 2251.46 today. still at that price, the NASDAQ remains 3.8 percent above the low of the year on March 10.

The S&P500 today, however, is .9 percent below that March 10 low. But that’s better than the DJIA performance, now some -4.67 percent lower than its previous low point of 2008.

indices-mar-10-08-to-jul-2-08.gif

 

DJIA -1.46 percent

NASDAQ -2.32 percent

S&P500 -1.82 percent

 

Small Advance

Tuesday, July 1st, 2008

July 1, 2008


After being in the red for most of the day, the first day of the second half of 2008 ended with all three indices posting advances. They were small, but they were positive, with the NASDAQ closing higher for the first time in four days.

With the market falling at the beginning of the year, then making a strong recovery, only to face losses and decline from where it started, it is difficult to produce evidence that suggests where it may be heading now.

One of the characteristics of the current cycle is the large number of days when results, while positive, were in changes less than one half of one percent. Days like today, for example.

Consider the following time series, depicting closes of the S&P500 since 2000, in that range. Clearly, there are far fewer of these changes when the market is falling –100 closes in 789 days between zero and one half percent- than when it moves higher -368 over 1,144 days.

sp500-pos-changes-but-less-than-5-percent.gif

Those ratios of small, positive closes are 12.7 percent of the days in a falling market and 32.2 percent when prices are surging.

Seems counter intuitive but there it is. As for the current situation, there is little that this comparison contributes to judging the future. So far in the 197 days since prices peaked last fall, 20 percent of the closes were positive but less than one half percent. That ratio is just about half way between the results for falling and rising market conditions!

DJIA .28 percent

NASDAQ .52 percent

S&P500 .39 percent

Vacation Notice

Tuesday, July 1st, 2008

Analysis will be delayed and not follow the regular, daily schedule beginning July 1.

I appreciate your patience and understanding, and your loyalty in visiting USMarketView.com