USMarketView

February 4, 2009

The market reverted to the recent pattern of significant variability in daily closes. Negative days following positive closes, and down turning to ups on the following day characterize the action of the last few months.  In line with that pattern, while yesterday was a gainer, today was a loser: the DJIA dropped  -1.51 percent, the S&P500  -.78 percent, whereas the NASDAQ was off a mere  -.08 percent.

A casual inspection of the data hints that the daily price variability of these indices is linked inversely to the trend of prices.  In bull years, the changeability seems far smaller than when prices are falling.  The diagram below compares the S&P500 closing prices with their rate of change since the beginning of 2008.

 

 

 

Even a glance at this information confirms that indeed, larger daily price changes occur when the S&P500 declines than when the index rises.  Moreover, there has been a decline, albeit a small one, in the daily rate of change since the steep slide of last autumn has become less severe. 

Perhaps the latest pattern of reduced volatility signals that the market is near the bottom.  Or possibly the fractured financial system and the reversals hitting business means that recovery is still distant.  Nevertheless, it is clear that focus on alterations in the rate of change yields insights on the market’s behavior.

  

DJIA              -1.51  percent

NASDAQ       -.08 percent

S&P500          -.78  percent

This entry was posted on Wednesday, February 4th, 2009 at 12 062009000000Wed, 04 Feb 2009 18:23:23 +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.