Finally, after nine straight positive closes, the NASDAQ closed lower. But that loss is far from an indication of a downshift in prices. As discussed in yesterday’s analysis, rationally, the odds of a decline were infinitely larger than the probalility of a further gain.
Furthermore, the NASDAQ decline was just -.28 percent, a number small enough not to raise the eyebrows of experienced followers of asset prices. The S&P500 lost -.26 percent, and continued its up and down price see-saw. Similarly, the .07 percent gain by the DJIA -the fifth advance in a row- deserves similar skepticism. All in all the day’s changes seem too small to imply change in the direction of prices.
The record shows 11 previous closes with today’s pattern and three happening since January 2000. While the following day had six declines, none took place after 1997. All of the next day closes were positive thereafter. Note that three of these took place within the past twelve months.
DJIA .07 percent
NASDAQ -.28 percent
S&P500 -.26 percentt