With the DJIA closing pattern at five successive gains, the NASDAQ registering the fourth uptick in a row and the S&P500 moving higher for the second straight day, the market maintains recording finishes that have not crossed the tape before. Therefore, the analytical program of MarketWatch, based on comparisons of past daily changes, cannot function. It is deprived of data for comparisons and projections.
Accordingly the focus of todays blog is different: it compares the frequency of daily index changes when each of the three indices has a different pattern of closes. In essence we address the question of how often, since January 2000, has the DJIA scored five successive advances, while the NASDAQ and the S&P500 have done so on only four or two days.
The accompanying figures show these data; further, they indicate their incidence in each of the up and down phases of the past two price cycles. As is to be expected, the S&P500 has more happenings than the NASDAQ and that index has more than the DJIA. Thats caused by the simple fact that two gains in a row occur more often than three gains in a row.
But the diagrams reveal the startling fact that positive runs crop up more often during upswings than when prices are in a decline. Whereas this revelation may, or could, be useful to day traders, it provides insights into the long run trend of prices. That is, rather than concluding that such data predict daily advances, the more critical insight is the intimation of the markets overall character; that is, whether the future trend will be one of rising or declining capital values.
DJIA .63 percent NASDAQ .44 percent S&P500 .71 percent