November 24, 2008
Prices advanced more than six percent for the NASDAQ and S&P500, while the DJIA gained 4.93 percent., after increasing by just about the same robust rate on Friday. Thats the good news; but there could be bad news ahead, because in the past, such large increases foreshadow market declines, not recoveries.
In 1987, for example, the indices rose seven, nine and ten percent on October 21; but that was only a pause in the steep decline that continued for another few weeks.
Similarly, the recent huge increases, on October 13, October 28 and November 13, failed to turn the market around unquestionably. Prices have not yet shown stability, either on the upside or in declining. What is clear, though, is that the daily swings, be they up or down, are increasingly in the more than five percent range.
DJIA 4.93 percent
NASDAQ 6.33 percent
S&P500 6.49 percent