Archive for August, 2008

Prices Move Higher

Thursday, August 14th, 2008

August 14, 2008

Advances characterized most of the trading, and the recovery withstood the later downward trend to close on the positive side. The NASDAQ led the indices with its gain of just above a full percent for the day.

Searching the trading data in order to summarize the market situation, we summarize the past three days as a +1/-2 sequence; that is, a positive close after two successive negative days.

There have been 48 of these since January 2000; today is the second time for the chain this year.

The figure below –for the DJIA- shows that most of these +1/-2/ strings came when the market was rising. There were 34 occurrences during the 2002 to 2007 expansion; only 14 incidents took place when the price trend was down. The same summary applies to the NASDAQ and the S&P500 indices.

djia-diag-one-up-day-after-two-down.gif

 

In terms of the following day, in the past, since 2000, both the DJIA and the S&P500, scored gains 30 times and declined on 18 days. The NASDAQ has 29 positive closes and 19 declines.

DJIA .72 percent

NASDAQ… 1.03 percent

S&P500 .55 percent

Another Down Day

Wednesday, August 13th, 2008

August 13, 2008

Losses continued for a second day in a row. They were limited for the NASDAQ and the S&P500, but reached almost a full percent down for the DJIA.

Continuing the price movement analysis by tabulating the continuity and frequency of daily changes, today is classified as a -2/+2/-1 chain. It is the second down day in a row; these followed two consecutive up days; which trailed a down day. This describes the happenings of the past week – from Thursday a week ago to today.

A total of 14 of these sequences occurred since 1950, eight of which came after January 2000. It is also the first such string for 2008.

Before this year, all these strings came during the last bull market of 2003-2007. While today’s result comes after many days of falling prices, it is too early to tell if this last event will be associated with a trend of falling or rising prices.

DJIA -.94 percent

NASDAQ… -.08 percent

S&P500 -.30 percent

First Decline in Three Days

Tuesday, August 12th, 2008

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.

sp500-all-indices-down-after-two-straight-closes.gif

 

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

Week Opens Up

Monday, August 11th, 2008

August 11, 2008


All three indices rose today; it was the second up close in as many days.

The NASDAQ increase was 1.07 percent, while the S&P500 gained .69 percent and the DJIA was up only .40 percent. In words, then, the NASDAQ moved ahead 2.68 times as much as the DJIA; the NASDAQ to S&P500 price change ratio is 1.55.

There have been six days, between 1976 and 2005, with price advance ratios of this magnitude. On the three occasions that came before January 2000, all the indices fell on the following day. The record since then is more favorable, with the NASDAQ and the S&P500 falling once on the next day, and increasing on the other two. The DJIA, however, had two negative closes and only one advance on the following days.

DJIA .40 percent

NASDAQ… 1.07 percent

S&P500 .69 percent

Topsy Turvy Week Closes Higher

Saturday, August 9th, 2008

August 8, 2008


A strong surge pushed the indices higher today, recovering more than Thursday’s losses. And together with Wednesday’s advance of near three percent, brought the market to a higher level than a week ago.

The trading pattern of the last three days continues to reflect and parallel the earlier period, between 2000 and 2003, in which prices suffered a major setback.

As for the week, it was the strongest performance since April 18, 2008, as the NASDAQ gained 4.46 percent from last Friday’s close. The DJIA moved up by 3.60 percent while the S&P500 increased 2.86 percent.

Prices of all three indices have recovered from their lowest week of the year on Friday July 11. Moreover, except for the DJIA, they have moved higher than their previous bottom on March 13, some 21 Fridays ago.

DJIA 2.65 percent

NASDAQ… 2.48 percent

S&P500 2.39 percent

Prices Take a Drop

Thursday, August 7th, 2008

August 7, 2008


All the indices fell today, after increasing on each of the previous three days. The NASDAQ was the smallest loser, with a -.97 percent. The S&P500 decreases -1.79 percent, while the DJIA was off -1.91 percent.

A total of 64 trading days, since January 2000, share this pattern of -1/+3 but the average fall off on those days is less than minus one percent.

On the other hand, there have been seven such days in 2008, and their average decline has been between -1.04 and -1.29 percent.

In the past, on the next trading day, the DJIA and the NASDAQ had 36 plus days and 28 negative days; the S&P500 had 38 advances and only 26 declines.

As for the seven subsequent days this year, all three averages posted gains on five days, retreating on just two days.

DJIA -1.91 percent

NASDAQ… -.95 percent

S&P500 -1.79 percent

Market Rise Continues

Wednesday, August 6th, 2008

August 6, 2008


The NASDAQ advanced 1.21 percent while the other two indices moved higher by .33 percent. This was the second straight positive day, and follows immediately after these averages fell for three days in a row.

There have been 18 such runs -that is, a +2/-3 chain- since 1977, five of which took place since 2000. Moreover, all of those in this century have the NASDAQ gain, like today, substantially higher than either the DJIA or the S&P500 advance.

In the past, on the following day, the NASDAQ continued higher 11 times, whereas the DJIA had 10 such days, while the S&P500 had an even number of plus and minus closes.

However, the ratio of positive days declines when looking at only the performance since January 2000. Both the NASDAQ and the S&P500 had two positive days and three declining days. The DJIA, however, scored only one advance, suffering four negative closes.

DJIA .33 percent

NASDAQ… 1.21 percent

S&P500 .33 percent

Prices Soar Nearly 3% after Falling for 3 Days

Tuesday, August 5th, 2008

August 5, 2008

Today’s dramatic turn around boosted the DJIA some 2.94 percent, with the gains of the other two indices just about the same; the S&P500 rose 2.87 percent whereas the NASDAQ moved up some 2.81 percent.

Of course such price advances are welcome news. The DJIA has recorded only 25 such closes since 2000. The S&P500 has a few more: 33; while the NASDAQ has 104 days with gains in excess of today’s 2.81 percent.

Yet there is a downside to this record of strong performance: all of the S&P500 gains in this century, in excess of today’s 2.87 percent, came in two segments. The first as the market headed down, between 2000 and 2003, and the second, after the market peaked in September 2007, and lasting until today.

When prices were moving ahead, between 2003 and 2007, there was not a single day on which the S&P500 scored such a large gain.

It is true that the NASDAQ managed two closes greater than today’s 2.81 percent in that rising market; but these occurred when prices were making a minor, negative correction.

DJIA 2.94 percent

NASDAQ 2.81 percent

S&P500 2.87 percent

Prices Fall for Third Day

Monday, August 4th, 2008

August 4, 2008


The indices continued their negative streak, with the NASDAQ losing -1.10 percent, the S&P500 . -.89 percent, and the DJIA -.37 percent.

Today’ close is the fourth time this year that prices declined three sessions in a row; it is number 41 in this century for three straight declines.

As for the next day during this time period, slightly more than half -23 for the DJIA and the NASDAQ, and 24 for the NASDAQ- posted positive closes.

Continuing the sequence analysis of the previous day’s trading -Friday of last week- there are now three days of successive falling prices; these followed two days of positive price changes, moreover, these came after a down day that came immediately after an up day. In short, this is classified as a -3/+2/-1/+1 sequence.

Only three such chains, before today, have occurred since March 2004.


DJIA -.37 percent

NASDAQ… -1.10 percent

S&P500 -.89 percent

Do This Week’s Closes Hold Clues to the Future?

Sunday, August 3rd, 2008

August 1, 2008


Friday’s closes were not much different from a week ago, as the daily changes just about offset each other. As the 31st week of 2008 came to a close, only the NASDAQ had recovered from the early March lows, whereas the other two indices still remained beneath those lows.

In considering the pattern of the past six days, focus on the daily changes. The closes of the past two days were negative; these followed two successive days of rising prices; moreover, these came after a down day that came immediately after an up day. In short, this is classified as a -2/+2/-1/+1 sequence.

Only six such chains have occurred since 1950. Indeed, the earliest one happened in June 1986, the next one in June 1991, and the past four since March 2003.

These dates are indicated by the vertical lines in the following diagram, which charts the closing prices of all three indices from 1986 to August 1, 2008.

two-down-after-two-up-after-one-down-after-one-up.gif

 

Obviously, the first four of these coincided with rising prices. While today’s incident occurs as prices are falling, it could also indicate the lower turning point of the current decline.

Some words of caution are important; obviously the future does not always replay the past. In addition, though, one important issue remains unresolved. If the -2/+2/-1/+1 chain signals an upsurge, why was it not present at all in the long climb to the previous, 2000 price peak?

DJIA -.45 percent

NASDAQ… -.63 percent

S&P500 -.56 percent