Falling from the very start, the NASDAQ dropped -2.98 percent. The S&P500 fell -2.38 percent while the DJIA lost -2.02 percent. Ranking the indices by their extent of the loss, both the NASDAQ and the S&P500 placed as the 185th worst day, and the DJIA was number 285 from the bottom.With the focus on the future, the question arises as to what todays losses the second of this size in the past few days- indicate for prices. Does this series indicate a down turn or just a pause in the positive trend that started in March 2009?
We consider also the pattern of recent closes. It summarizes as -1/+1/-1, or todays down day succeeding yesterdays gain which came after Fridays decline. While the record shows 74 such closes since 2000, just 8 of these had losses comparable to todays.
The diagram illustrates this information and the S&P500 closing prices since 2000. First, no obvious relationship exists between these incidents and the trend of prices over the past two complete cycles. Yet it is troubling to recognize the frequency of these episodes often clustering near the upper turning points, before or coinciding, with a decline in prices.Nevertheless, because a few of the collections coincide with short period of falling prices before the market continues its appreciation, it is not practical to infer the future, longer term impact of these recent closes.However, this situation precludes also the continuation of recent projections, based on past patterns, that security prices have a solid base for further appreciation,
DJIA - 2.02 percent NASDAQ - 2.98 percent S&P500 - 2.38 percent