Thursdays market profile, almost a clone of the previous session, finds all three indices advancing but only marginally. The DJIA gained .24 percent, the S&P500 rose .13 percent while the NASDAQ hardly moved, at .05 percent. Increases so small rarely cross the tape. In faction only 56 other days, since 2000, did the NASDAQ advance by a smaller amount. The DJIA similarly shows only 320 gains lower than todays; the S&P500 has 175 gains below todays .03 percent.Todays pattern is even rarer than yesterdays: it is a first for this combination of 6 consecutive NASDAQ advances, 3 increases in a row for the DJIA and the S&P500 moving up after the previous decline.
Accordingly, our analysis focuses on the S&P500 and its distribution of gains smaller than .13 percent over the last two cycles. The diagram reveals that the proportion of positive days exceeds the negative ones when prices are trending up. During the first falling phase, 58.5 percent of all changes were negative day. But during the following recovery, the proportion of down days fell to 43.7 percent.
That tendency continues during the current cycle, with declines amounting to 50.7 percent during the declining price period, and then decreasing to 41.5 percent. Comparison of these last two ratios, however, provides a two-faced view of the future.
That the positive trend ratio of the current recovery exceeds that of the decline that ended in 2009, makes a case for optimism, that prices will trend higher. Yet, since the differences are quite small, during the down and up phases, between the top of 2007 and the recovery of 2009, an equally convincing case of uncertainty, of not necessarily higher prices, is just as convincing.
DJIA .24 percen tNASDAQ .05 percent
S&P500 .13 percent