While the NASDAQ index closed higher, plus .18 percent, today for the fifth consecutive session, the DJIA and the S&P500 ended in the red, at -.17 percent and -.07 percent. This result does not fit the rather optimistic outlook for prices based on Tuesday’s pattern. Of course it’s possible to equivocate; to claim these rather small changes, not very far from zero, could just as well have ended on the positive side of zero.
But that fiddling serves no purpose: MarketView uses the reported numbers as indicators of historical tendencies; and how investors react to actual given changes. That criterion provides hard, undoctored numbers rather than fanciful imaginations of what might have been.
Today’s NASDAQ pattern of +5 and of -1/+4 for the DJIA and the S&P500 has occurred on 50 other closes since 1950 and just seven times so far in this century. Similar to yesterday’s inability to use such infrequent results for projecting future price trends, all that can be stated for today’s combination is that since 2000, the following day’s prices increased four times and declined three times.
Yet three of these seven next-day prices almost coincided with upper and lower turning points. The one in 2003 came 57 trading days after the trough, when each of the three indices gained around 1.3 percent. Similarly, just two days after the October 2007 peak, all three averages fell; finally, at the end of 2008, some three months before prices hit bottom on March 9, 2009, these indices increased between 3 and 4 percent on the following day.
DJIA – .17 percent
NASDAQ . 18 percent
S&P500 - .07 percent