USMarketView

March 4, 2009

Prices gained more than two percent, in the market’s

first up day since February 25.

Moreover, the direction was up, at a good pace, for the entire day. There have been 18 such closes since 1950, when four negative days in a row preceded an up tick.   Eight of these occurred in this century. 

A note of importance is that five of those eight occasions came at, or near, the bottom of a decline.  The others coincide with near tops and rising values.

Also, the gains in this scenario have exceeded today’s on just three occasions; one of these occurred in July 2002, when the increases were in the five to six percent range.

In the past, however, retreats dominated the next day.  The S&P500 recorded only five plus days, while this index fell on 13 follow-up days.  The DJIA and the NASDASQ fared only a little better, with six advances compared to twelve declines.

DJIA                2.66 percent

NASDAQ        2.80 percent

S&P500           2.79 percent

March 3, 2009

Although the fluctuations around yesterday’s final prices showed gains for most of the day, at the close all three indices posted losses.  However, these were fractional, and are a change from the recent, substantial declines.  Despite these modest retreats, the fact is that today’s action brought the negative count to five losses in a row, and except for the uptick on February 24, the eleventh decline over the last twelve trading days.

Yet considering the action of the DJIA relative to its 1929 decline, today’s value of 6,726.02, which is  47.5 percent of the October 2007 top, compares favorably to the level of the Great Depression experience at this stage of the correction.  The figure below illustrates this comparison.  It indicates that the ratio in our time remains above the 1929 ratio, even though prices were on a rise then, while the current DJIA is heading down.

That earlier huge and long decline, ended in July 1931, on the day before Independence Day.  If that time profile were to carry over into this market, there would still be another 150 trading days before it hits bottom

DJIA                -.55 percent

NASDAQ        -.14 percent

S&P500           -.64 percent

March 2, 2009

We can put a positive aspect on a sad day by considering the accumulated loss rates of the past ten days.  Ranked in the order of the severity of their decline, these were the 20^th worse for the S&P500, the 26^th worse for the DJIA, and for the NASDAQ, only the 77^th from the top.

Indeed, the top places in this ranking belong to the bottom of the 1987 bear market, when seven of the top ten deepest losses occurred.  In that cycle, these closes coincided with the end of that price correction, and then the market went on to continue its upward trend.

As of yesterday, the S&P500 had lost  -15.24 percent from its February 26 position, ten days ago.  The DJIA and the NASDAQ were down a little more than  -13 percent.  Whereas at the bottom of the 1987 drop, the ten-day declines ran in the  -20 to  -30 percent range.

Is this similarity in the nature of an insight into the developments of the next few days, or just a comparison of seemingly similar phases of the market?  As we all know, only time will tell.

DJIA                -4.24 percent

NASDAQ        -3.99 percent

S&P500           -4.66 percent

February 27, 2009

After a run of six negative days, prices recovered last Tuesday, but then drops for the rest of the week, brought us to today’s result: nine declines since  February 13. There are not many such sequences in the record, but then it is also true that there are not many scenarios where the U. S. economy has suffered as many setbacks, and, since January 20, a plentiful list of activist policy initiatives.

The S&P500 had only eight such series before today.  An even number, four, occurred in good years as in years when the December close was below the January opening.   The NASDAQ, with its shorter history, shows four happenings, with three of these in years when the market was in decline.

In the past, on the following day, the S&P500 experienced a further decline; it reversed direction, rising, on only two days. The NASDAQ’s record is more favorable, showing an even number of declining and rising days.  Moreover, while three of its changes were less than one percent, it soared more than seven percent on one –the last- occasion.

DJIA              -1.66 percent

NASDAQ       - .98 percent

S&P500          -2.36 percent

February 27, 2009

• After a run of six negative days, prices recovered                           last Tuesday, but then drops for the rest of the week,                brought us to today’s result: nine declines since                             February 13. There are not many such sequences in the record, but then it is also true that there are not many scenarios where the U> S. economy has suffered as many setbacks, and, since January 20, a plentiful list of activists policy initiatives.

The S&P500 had only eight such series before today.  An even number, four, occurred in good years as in years when the December close was below the January opening.   The NASDAQ, with its shorter history, shows four happenings, with three of these in years when the market was in decline.

In the past, on the following day, the S&P500 experienced a further decline; it reversed direction, rising, on only two days. The NASDAQ’s record is more favorable, showing an even number of declining and rising days.  Moreover, while three of its changes were less than one percent, it soared more than seven percent on one –the last- occasion.

DJIA              -1.66 percent

NASDAQ       - .98 percent

S&P500          -2.36 percent