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 todays close. The pattern now stands at -1/+1/-1/+1/-1, that is todays decline follows Fridays rise, which came after Thursdays decline, that succeeded Wednesdays gain, after Tuesdays 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