Archive for November, 2008

Deep Losses Continue

Thursday, November 6th, 2008

November 6, 2008

Prices took another beating today, as the S&P500 off by -5.03 percent, repeated the two day, significant drop sequence at the end of October. While that earlier run cost the S&P500 more than minus three percent in two consecutive sessions, the numbers this week are worse:- 5.03 percent today on top of yesterday’s -5.27 percent.

The same double day pasting hit the DJIA and the NASDAQ, with today’s minus four percent closes added to yesterday’s minus five percents.

Huge price swings dominate the trading since the beginning of October. The NASDAQ changes range from a low of minus 8.5 percent to a high of 9.6 percent. Such wide fluctuations typify steep bear markets. In 2002, when the NASDAQ lost minus 23 percent, the daily change rate ran from minus four percent to plus eight percent. However, in 2004, with prices increasing 24 percent, the daily range was a narrow minus four to plus five percent.

The distribution of daily price changes approaches a normal curve in good years, with prices rising or falling in a symmetrical, by size, fashion. In contrast, falling markets’ distributions look like a rectangle because the number of large and small changes seem identical.

DJIA -4.85 percent

NASDAQ… -4.34 percent

S&P500 -5.03 percent

Stocks Give Back More than Yesterday’s Gain

Wednesday, November 5th, 2008

November 5, 2008


Dropping by more than minus five percent, the market continues its seesaw of ‘one step forward and two steps back.’ Except for the NASDAQ, these indices have changed direction ten times in the last twelve days. Yet the NASDAQ action is part of the up-then-down pattern as well – but in larger steps. Its loss today comes after six straight gains; and these succeeded five losing sessions in a row. The net result is a loss of -88.39 points, or some -4.99 percent, over the last 12 trading days.

Losses deeper than minus five percent have hit these indices simultaneously only eight times before today. All of those occurred either as the market was about to drop, or as prices had hit bottom already. And three of these days were this year, between the end of September and the middle of October.

Yet on the following day, the indices closed higher every time but one. That decline is the recent one of October 8, just 20 days ago, as prices fell for the seventh consecutive session.

DJIA -5.05 percent

NASDAQ… -5.53 percent

S&P500 -5.27 percent

Stocks Score Top Presidential Election Day Gains

Tuesday, November 4th, 2008

November 4, 2008

Prices soared by three percent or more on this Election Day. In the seven previous presidential election days since 1984*, these indices have fallen twice and increased four times. Moreover, all the changes, whether negative or positive, were relatively small. The largest gain was in 1984, when the DJIA rose 1.21 percent.

Today’s results dwarf those previous Election Day results. The S&P500 shot up some 4.08 percent, while the DJIA followed with a 3.28 percent gain, and the NASDAQ increased 3.12 percent.

[*The NYSE closed on Election Day until the 1984 Presidential Election.]

Today’s NASDAQ gain was its sixth positive day in a row. Placing this welcome development in perspective, note that this index has 183 such six-day runs in its history; four of these occurred in 2007. Moreover, the NASDAQ has had as many as 19 successive positive days, and has scored 51 runs of ten or more rising days in a row.

DJIA 3.28 percent

NASDAQ… 3.12 percent

S&P500 4.08 percent

NASDAQ Run-up Continues

Monday, November 3rd, 2008

November 3, 2008

Today’s NASDAQ gain of just .31 percent it is the fifth positive close in as many days. Yet this run follows a similar five-day streak, but in this earlier one, the index posted five successive losses. The net result of the ten-day scamper is a 44 point drop in the NASDAQ. Therefore, despite some very good days offsetting losers, the index lost -2.55 percent since October 20.

The S&P500 and the DJIA daily close patterns follow a different route, with runs no longer than two days in either direction. Yet while the S&P500 lost -1.92 percent, the DJIA gained .59 percent.

The diagram below plots the frequency count of the NASDAQ against the daily closing prices between September 2 and today, November 3. In this time, the NASDAQ had two negative runs – one lasting seven trading days, and other for five days – and the current positive run, now five days old.

Comparing the runs to the index changes indicates that major price changes do not occur in increments of one or two day lengths, but that the large modifications require consecutive closes of several days. That appears to be the rule both for significant declines as well for large increases.

oct-08-nasdaq-runs-and-closes.gif

DJIA -.06 percent

NASDAQ… .31 percent

S&P500 -.25 percent