USMarketView

May 18, 2009

WEB HOST IS DOWN – FAILED ON 5/15 . . . STILL NOT UP

Click on BLOG to get the daily analysis; ignore lack of current headline.

Prices were up near three percent at the close, as the NASDAQ climbed 3.11 percent, the S&P500  3.04 percent and the DJIA  2.85 percent.  Only 41 other days increased this much or more since January 2000.

Thirteen of these days came between December 2000 to October 2002, when prices were falling and hit the bottom of that bear cycle.  Three shared the crawl along the bottom between January and March 2003.  A total of 25 closes saw increases at least as large as today between September 2008 and April 2009, a period marked by a substantial drop in prices.

The DJIA continued its up-then-down pattern, and today posted its tenth reversal in a row.  Combining this sequence with the +1/-1/+1/-3* pattern of the NASDAQ and the S&P500 yields only six other closes in the past 59 years.  One occurred at the 2007 top, two in the 1996-1999 recovery, while the other three took place in the early 1990’s and in 1979, a period in which prices were climbing but also quite near the top.

In the past, on the following day, the indices posted two gains, both near the one percent mark, and four losses.  Two of these negative days were no deeper than fractions, but the other two posted declines between  -1 and  -2 percent.

DJIA                  2.85 percent

NASDAQ          3.11 percent

S&P500             3.04 percent

*The abbreviation for a positive close, after a negative close, following a positive close, that happened after three losing days in a row.

May 15, 2009

WEB HOST IS DOWN – FAILED ON 5/15 . . . STILL NOT UP

Up and down for the eight’s day in a row, the DJIA has fluctuated this long only eight other times since 1950.  Yet no clear pattern emerges that is usable in terms of forecasting the market’s direction.  They occur twice as often when prices have reached a top as when they are rising.

For comparison, consider the frequency of the up-then-down pattern by the number of seesaws.

                        Number of Up-then-Down Runs                  Frequency

3                                                                                            293

4                                                                                            157

5                                                                                              67

6                                                                                              36

7                                                                                              15

8                                                                                                8

9                                                                                                2

Clearly, these are rare events.  But then market patterns have followed this track of odd and unusual combinations quite often recently.

DJIA                  .-.74 percent

NASDAQ           -.54 percent

S&P500             -1.08 percent

May 14, 2009

A good day at the start, evaporated as the session wore one.  At the close, the NASDAQ had gained  1.50 percent, followed by the S&P500 at  .97 percent and the DJIA up  .55 percent.  Although the indices moved in the same direction today, their recent pattern of ups-and-downs is not uniform.

The DJIA continued its seesaw of gain then loss for the eighth day in a row, whereas the other two indices posted their first positive day after three declines.  This pattern has repeated 16 times before, with five occurrences since January 2000. 

Noteworthy is the fact that every one of these five 21^st century events came either at, or near, the top of a strong, rising market.

The indices do not have a consistent record for the following day.  The NASDAQ has 10 increases and 6 declines; while the S&P500 scored the same number of gains as losses.  The DJIA fell 9 times and rose on 7 days.

The outlook posted yesterday, based on the past, failed to provide the correct direction of today’s market, especially since the number of negative days had a far larger number of declines than increases.

DJIA                  .55 percent

NASDAQ        1.50 percent

S&P500            .97 percent

May 14, 2009

A good day at the start, evaporated as the session wore one.  At the close, the NASDAQ had gained  1.50 percent, followed by the S&P500 at  .97 percent and the DJIA up  .55 percent.  Although the indices moved in the same direction today, their recent pattern of ups-and-downs is not uniform.

The DJIA continued its seesaw of gain then loss for the eighth day in a row, whereas the other two indices posted their first positive day after three declines.  This pattern has repeated 16 times before, with five occurrences since January 2000. 

Noteworthy either is the fact that every one of these five 21st-century events came at, or near, the top of a strong, rising market.

The indices do not have a consistent record for the following day.  The NASDAQ has 10 increases and 6 declines; while the S&P500 scored the same number of gains as losses.  The DJIA fell 9 times and rose on 7 days.

The outlook posted yesterday, based on the past, failed to provide the correct direction of today’s market, especially since the number of negative days had a far larger number of declines than increases.

DJIA                  .55 percent

NASDAQ        1.50 percent

S&P500            .97 percent

May 13, 2009

The NASDAQ loss of  -3.01 percent, its worst performance in the last 17 trading days, is also its third straight decline.  The last time this index fell three days in a row was on February 27. 

The S&P500, down  -2.69 percent, and the DJIA, off -2.18 percent, also posted their deepest loss since April 20.  Indeed, only 49 declines steeper than today’s occurred since January 2000; moreover, only 20 such closes exist before 2000.

Only the DJIA continued its up-and-down gyration, now in its seventh day, while the other two indices experienced their third decline in as many days.  This is the 21^st repeat of this pattern since 1975; yet it has not been seen since October 2005.

In the past, the day following posted declines more often than gains.  The NASDAQ fell 14 times and moved higher on six days.  The DJIA has an 11 negative and 9 positive history, while the S&P500 scored 8 advances against 12 declines.

This heavily downward bias is similar to yesterday’s state of affairs, in which the frequency of losses in the past outnumbered gains on the next day.  In that sense, history provided a useful guide to today’s outcome.

DJIA                  -2.18 percent

NASDAQ          -3.01 percent

S&P500             -2.69 percent

May 12, 2009

The positive side had the DJIA gain  .60 percent; the negative feature had the NASDAQ drop  -.88 percent; the S&P500 was in-between, losing -.08 percent.  Yesterday’s projection, based on the wide distribution of its negative changes, called for a repeat of the past: small declines in the DJIA and the S&P500, and a substantial drop for the NASDAQ.

Today’s closes could be interpreted as sustaining that expectation.  At least in the sense that the NASDAQ lost nearly a percent, while one of the other two indices had only a small decline.   The DJIA gain, however, of more than a half a percent, does not fit that pattern.

The future, based on today’s pattern of closes in the past, does not look bright.  The S&P500 shows 11 declines and 7 gains for the following day.  The NASDAQ record is somewhat brighter, with only 10 losing days and 8 gainers, while the DJIA has an even number of declines and increases.

Note that the up –and-then-down pattern still dominates the action.  The DJIA posted its sixth change in direction in as many days, whereas the NASDAQ and the S&P500 varied their pattern by falling for a second straight day.  Yet with the S&P500 losing a mere  .08 percent, .its performance today fails to qualify as a significant change in direction.

Today’s pattern –the DJIA rising and the other indices falling for the second day in a row- has occurred 36 times since 1950, and 14 times in this century.  Of note is the fact that the DJIA and the S&P500 posted fractional losses over this entire period, while the NASDAQ dropped more than one percent 14 times.  It posted two declines in excess of minus three percent.

DJIA                  .60 percent

NASDAQ         -.88 percent

S&P500            -.08 percent 

May 11, 2009

Prices continued to seesaw as all three indices moved down, offsetting their Friday advances.  While the NASDAQ slipped just  -.46 percent, the other two fell much deeper: the DJIA lost  -1.82 percent and the S&P500 declined  -2.15 percent. 

This large a discrepancy in daily price changes happened only two other times.  One was in August 1974 and the other occurred in 1986.  Further declines followed both those events, but with the result differences reversed.  The NASDAQ on the next day dropped more than one percent, whereas the DJIA and the S&P500 fell fractions.

The continuation of the up and down price swings is the other rare, but less unusual, feature of today’s close.  The pattern now stands at  -1/+1/-1/+1/-1, that is today’s decline follows Friday’s rise, which came after Thursday’s decline, that succeeded Wednesday’s gain, after Tuesday’s loss. 

While 21 such five-day up and down runs occurred since 1950, some 18 have hit since January 2000.  This period, from 2000 to today, has three distinct profiles: falling prices from 2000 to the end of 2002, recovery and an extended run of increases, and the current decline, starting in 2007. 

Just 8 of these 21runs accompanied the four-year bull period, whereas 10 occurred while prices were falling, in the first and in the current phase of the market.

On the following day in this episode, there were nearly an equal number of declines and increases. The DJIA and the S&P500 had 11 gains and 10 losses, while the NASDAQ came in with 10 gains and 11 losses on the next day.

DJIA                  -1.82 percent

NASDAQ           -.45 percent

S&P500            -2.15  percent

May 8, 2009

The last five days saw five direction changes, as prices rose on Monday, fell on Tuesday, increased on Wednesday, fell again on Thursday and closed the week with a gain.  The S&P500 advanced  2.41 percent on Friday, while the DJIA increased  1.96 percent and the NASDAQ moved up  1.33 percent.

In the past, such strength with this pattern of fluctuations, on such fluctuations, occurred quite often.  Indeed, the last two repeats, just months ago, resulted in a day of 6-7 percent gains, and 4-5 percent.  Moreover, seven of the last eight series moved forward more than one percent on the final day.

Back in 20003, when the market finally hit bottom, the S&P500 increased  8.8 percent in ten trading days as it turned higher and started a new bull market.  In 2009, in the last two weeks completed today, the S&P500 has added  8.36 percent to its value. 

Furthermore, in 2003, prices increased seven times in those ten days.  In 2009, however, with successive up and down changes, the overall advance is at just about the same rate.

Yet a significant difference exists: in 2003 the market had three distinct bottoms, which each one ending lower than its predecessor.  So far, in 2009, though, only two such troughs have happened up until now. 

Accordingly, if price actions are similar at turning points, the comparison of the past ten days foretells an imminent recovery.  But if the number of bottoms, at the trough, is the issue, the ongoing price increases are not enough – a lower, third, base needs to happen to signal an end to this long decline.

DJIA                  1.96 percent

NASDAQ          1.33 percent

S&P500             2.41  percent

May 7, 2009

Today’s drop features the NASDAQ, off  -2.44 percent, more than double the DJIA decline of  -1.20 percent.  The S&P500 also fared much better than the NASDAQ, losing just  -1.32 percent.  The market has changed direction now for three days in a row.  Yet on Monday, the NASDAQ index scored its fourth consecutive positive day, while the other two averages posted only their second straight increase.

Recent trading patterns display unusual characteristics, and this week’s pattern continues this trend.  There has been only one other day in the entire record that shares this week’s daily closing outline.  That occurred on September 7, 2007, just before the market topped out.

It is not feasible to attempt a forecast based on only one sample point; therefore, today, as yesterday, there no estimate of future will be posted.

DJIA                  -1.20 percent

NASDAQ           -2.44 percent

S&P500              -1.32  percent