Archive for May, 2009

NASDAQ Lags Sharp DJIA and S&P500 Gains

Wednesday, May 6th, 2009


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 NASDAQ’s 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 1980’s.

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. 

Yesterday’s 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.  Today’s outcome is consistent with this experience.

 

DJIA                  1.21 percent

NASDAQ           .28 percent

S&P500             1.74  percent

Prices Ease

Tuesday, May 5th, 2009


May 5, 2009

The three indices, in the red all day, lost only fractions at the close.  The NASDAQ was off  -.54 percent, the S&P500 fell  -.38 percent while the DJIA lost a mere  -.19 percent.  It was the first down close in five days for the NASDAQ; in three days for the DJIA and the S&P500.

Prices have been on the rise since March 9, some 40 trading days ago.  So far, this downturn hit a bottom on November 21, 2008, and then rose for 27 days, before hitting a top on January 2.  The next phase, a decline, lasted 44 days, and then the current upswing started. 

The last price cycle that ended in 2003, recovered after touching three successive bottoms.  That chronology was 21 days from the first bottom before falling for the next 33 days.  The next climb took 66 days, followed by a 38-day decline. In sum, it took 158 trading days, and three bottoms before the next bull cycle started.

The current cycle is only 111 trading days old; it is currently on the rise after hitting two bottoms.  Moreover, only 40 days have passed since the last turn around, compared to the 66 days of the 2000/2003 cycle.

As for today’s decline, it defied history, which has triple the increases as declines.  The record for tomorrow, in the past, is distributed more equally with losses occurring almost as frequently as advances.

 

DJIA                  -.19 percent

NASDAQ          -.54 percent

S&P500             -.38  percent

Fourth Advance for NASDAQ – Second for DJIA and S&P500

Monday, May 4th, 2009

May 4, 2009

The S&P500 led the market with an increase of  3.39 percent, while the DJIA gained 2.6 percent and the NASDAQ rose  2.58 percent.  This is the fourth positive day for the NASDAQ, and the second plus day in a row for the DJIA and the S&P500.

Today’s pattern mirrors, in part, that of April 24, Friday of a week ago. Yet those moves were not as large.  Then the S&P500 moved  1.67 percent, only half as much as this close, while the NASDAQ did not reach today’s forward. move.

Moreover, the earlier event was weaker in another dimension because it followed the pattern  2/-1/+1/-1, shorthand for 2 advances after one decline, which followed a positive and an earlier negative day.

Today’s chain – 2/-1/+1/-2 –  differs because its origin, five days ago, began with a two-day decline.

Only four other such closes exist, in 2007, 1996, 1983 and 1976.  Furthermore, none of those came in nearly as strong as today’s.

Friday’s conjecture for today, based on the history of that pattern, resulted in a call for another positive day.  That did occur.  The scenario for Tuesday, also based on earlier experiences is positive, with history revealing three advances to one decline.

 

DJIA                  2.61 percent

NASDAQ          2.58 percent

S&P500             3.39  percent

Another Slightly Different Close

Friday, May 1st, 2009


May 1, 2009

The week ended with almost a repeat of yesterday, because prices remained almost identical to Thursday.  Yet today’s changes, while small, were just about double yesterday’s.  Moreover, the DJIA as well as the S&P500 ended on the positive side.  These indices each gained  .54 percent whereas the NASDAQ was up only  .11 percent.

The patterns of recent closes have one thing in common: they do not occur often.  Indeed, without exaggeration, they are rare.  Today, the NASDAQ was in positive territory for the third day in succession; at the same time the other two indices realized gains after yesterday’s losses.  This combination happened just 95 times since 1950, with just 18 in this century.

Yet today’s changes are significantly smaller than those with the same pattern –three plus days for the NASDAQ and just one for the DJIA and the S&P500- occurring since January 2000.  Their median change is .85 percent for the S&P500,  .81 percent for the DJIA and  1.08 percent for the NASDAQ. 

The size alone of today’s changes provides another exceptional dimension.  Only two other closes exist –one in 1976 and the other in 2004- with increases as small.

Considering what might happen on Monday, by extrapolating the pattern of changes in the past, yields a heavy majority for further gains.  The record shows only three losses, compared to 15 gains for the NASDAQ.  The S&P500 has six losses and 12 gains, while the DJIA comes in with seven losses and 11 gains.

However, if instead, only the sizes of today’s upticks come into play, then the estimate is negative, for both of those events were followed by declines.

 

DJIA                  .54 percent

NASDAQ          .11 percent

S&P500             .54  percent