USMarketView

August 12, 2008

Prices fell today; it was the first down day since last Thursday. In terms of successive strings of daily changes, the record is -1/+2 - that is, to repeat, a negative close following two straight gains.

There have been 119 such sequences since 1950; 64 of these occurred since January 1950, with seven taking place this year.

Plotting the S&P500 closing prices for those 64 days, as shown in the figure below, allows an inference about the association of these -1/+2 chains and the flow of prices.

 

Summing up this pictorial history reveals that 45 of these 64 days were associated with a period of rising prices; while 19 days -–seven of which are in 2008- occurred when the trend was negative.

As for the following day, in the past the great majority were positive. The S&P500, for example, had 38 positive days and only 26 declines after experiencing these -1/+2 chains. The DJIA, while similar, had two additional down days, while the NASDAQ had three more.

Moreover, the outlook, in terms of the seven -1/+2 chains of this year, is brighter: there were five up days and only two down days for all three indices.

DJIA -1.18 percent

NASDAQ… -.38 percent

S&P500 -1.20 percent

This entry was posted on Tuesday, August 12th, 2008 at 12 052008000000Tue, 12 Aug 2008 17:22:11 +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.