April 15, 2009
While the NASDAQ scored a positive close, its .07 percent increase came in far behind the DJIAs 1.38 percent and the 1.25 percent gain of the S&P500. This finish is consistent with history: when all three indices fall, then increases follow on the next day, more often than declines.
The pattern established by todays closes is rare, because the DJIAs recovery follows two negative days whereas the NASDAQ and the S&P500 upticks come after just a single decline. Indeed, only twelve such events occurred since January 2000. An indication of what could be in store for tomorrow can be gleaned from these earlier closes. The DJIA has 9 declines and 3 gains on the following day, whereas the other two indices negative margins are almost the same, with 8 negatives and 4 positive closes. Furthermore, two of the losing days registered declines near minus two and minus four percent, whereas the largest gains were below two percent.
Another look at the record, as shown on the following graph, confirms past observations that these closes, in the past, have not clustered when prices were reviving and moving higher.
DJIA 1.38 percent
NASDAQ .07 percent
S&P500 1.25 percent