May 6, 2009
In an unusual close, the NASDAQ moved up just .3 percent whereas the S&P500 rose 1.74 percent and the DJIA increased 1.21 percent. Today is only the 11th such occasion since 1971, the year the NASDAQs index began. Moreover, October 1988 was the last time that such a large disparity in gains happened. In fact, seven of these combinations happened between 1973 and 1975, while the other three were in the 1980s.
Gains outnumbered declines 6:4 on the following day for the DJIA and S&P500, and 7:3 for the NASDAQ.
Today features a further atypical combination, namely the closing pattern of the NASDAQ differs from that of the DJIA and the S&P500. These two indices closing pattern for the last three days is +1/-1/2, that is a positive close after a decline that came after two successive gains. The NASDAQ, however, has followed a +1/-1/+4 combination meaning that the past two closes occurred after four straight increases.
This sequence occurred only four other times with non since September 2007. Losses outnumber increases on the following day for the S&P500, by a ratio of 3:1, while the DJIA has an equal number of each and the NASDAQ has only one loss compared to three advances.
Neither of these oddities seems to be associated with turning points or other features of market change.
Yesterdays outlook described expectations for today as negative, based on the past pattern of changes. The NASDAQ had seven gains against four losses; the DJIA and the S&P500 were more even, with six gains and five losses. Todays outcome is consistent with this experience.
DJIA 1.21 percent
NASDAQ .28 percent
S&P500 1.74 percent