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The three indices maintained their recent form of minimum daily movement, losing  -.15 percent on next to the last day of 2010 trading. They have now moved in this narrow range for the fourth consecutive day.  

The record shows just 12 other identical sessions since January 2000; the last four, plus today’s, occurring in December 2010, this month. On the day following, the S&P500 had an even number of declines and advances, while the DJIA and the NASDAQ had seven losses and five gains.

Moreover, on the next day, four of the DJIA changes remained in this same, small range, with the S&P500 having three while the NASDAQ had two.

Tomorrow, Dcember31, of course is the last day of exchange trading for the year. On that final day, each of these indices had declines outnumbering gains in the past 11 years. The NASDAQ showed only two positive closes and fell in the other nine sessions. While the DJIA and the S&P500 have a better score, nevertheless, they posted seven losses and four increases.  

DJIA                  -.14 percent

NASDAQ          - .15 percent

S&P500              - .15  percent

Small gains closed another day, with the NASDAQ up  .15 percent, the S&P500 plus .10 percent and the DJIA adding  .09 percent. Changes of this small size are a glitch: they total to about 150 closes, of the 2,760 days since January 2000. That comes to about five percent. Yet these unusual magnitudes dominate the market since last week.  

Around this time of the year, significant interest about next year’s prices takes center stage. At one time, so the adage went, January prices typically rise.

 The diagram below plots the changes of the S&P500 in these two contiguous months over the last ten years. With the December changes in red, and the following January closes in blue, the directions, and their changes, come into clear view.

They show that in most years, prices deteriorate in January; only two, perhaps three, Januarys saw further appreciation over the December record. 

DJIA                   .09 percentNASDAQ           .15 percent

S&P500               .10  percent

The top gainer today is the DJIA. Its rise of  .18 percent is more than twice the size of the  .08 percent S&P500 gain; the NASDAQ’s loss of   -.18 percent is the second smallest daily modification since last week.

This stability could be the result of the holidays’ relaxation spirit; or that prices are hovering near their equilibrium. But we can also attribute it to year end weariness, a factor not applicable only to this year.

Indeed, the variance-to-median ratio of the December market since 2000, comes to a much smaller number than of all the other months of the year. The average daily change of the NASDAQ over the first 11 months comes to  .063 percent, which is far larger than the .047 percent average daily December variation.

The ratio of the December variance to median change is just 17; whereas the other-11-months variance of 3.53 is more than 50 times larger than the average daily change of  .063 percent.

This proportion holds also for the S&P500, with its 11-month ratio of 44 double the 21 December proportion.

However, the DJIA does not fit into this mold. Although its December average daily change of  .030 percent is smaller than the .041 percent 11-months change, its December variance to median change of  44 exceeds the 11-month ratio of 42.

DJIA                     .18 percent

NASDAQ          - .16 percent

S&P500                .08  percent

Prices closed almost unchanged from the last session; but the DJIA ended down while the NASDAQ and the S&P500 inched forward. Thus today’s pattern of  -1  for the DJIA and  +2 for the other two is the exact complement of Friday’s configuration.  

Since this pattern occurred just 9 times before, no reasonable projection for the next day is meaningful.Considering the prices changes in the light of the holiday season, note that the very next day after the holiday close, prices moved higher in seven of the last ten years.

Based on the December record since 1990, the outlook for tomorrow is not as favorable. While the number of gains equaled the frequency of losses –with five of each- all indices suffered three straight losses in the last three years. 

DJIA                        - .16  percent

NASDAQ                   .03  percent

S&P500                   .05  percent

The DJIA closed higher for the third straight session whereas the NASDAQ and the S&P500 experienced their first decline since December 16, some 6 trading days ago. However these changes are quite small: the NASDAQ lost  -.08 percent, the S&P500 fell  -.16 percent whereas the DJIA uptick was limited to  .12 percent.

More notable than the continuity of slight daily changes is the ongoing run of patterns rarely experienced before. Today’s combination of minus 1 for the NASDAQ and the S&P500 with the DJIA at plus 3 has occurred only 6 previous times in the past 11 years: moreover, the last happening goes back to 2007, with three others in 2000.

Very few closes over the last several weeks experienced the more common patterns, the combinations with more than ten repeats since 2000, almost 2,800 sessions ago!

Expectations for Monday, the first trading day after the weekend’s holiday, based upon the record of the last ten years are strongly positive. Gains outnumbered losses by a wide margin: 8 increases with only 2 declines on the day following Christmas.

DJIA                             .12 percent

NASDAQ                    -.08 percent

S&P500                       -.16 percent

  Though not as much as yesterday, the market continued to move higher. The DJIA moved up for the second straight session, adding  .23 percent while the NASDAQ and the S&P500 extended their positive run to five. The S&P500’s gain of  .34 percent  falls short of yesterday’s .60 percent, whereas the NASDAQ  .15 percent gain comes to less than a quarter of the day before.

The pattern now stands at  +5 for the NASDAQ and the S&P500, whereas the DJIA’s comes to 2. Only 12 previous closes have this combination, with 5 since the beginning of 2000.

Contrary to yesterday’s count, this combination shows more declines than gains on the following day, though with just five previous data points, not a lot of confidence attaches to that projection.On the other hand, the days-before-Christmas record supports further gains tomorrow; since 1990, eight of these two sessions before the holiday moved further ahead. 

DJIA                                      .23 percent

NASDAQ                             .15 percent

S&P500                                .34  percent 

Scoring their fourth positive day in a row, the NASDAQ added
.68 percent and the S&P500 advanced .60 percent. The DJIA also moved .48 percent higher for its first positive close since last Thursday. That makes today’s pattern +1 for the DIA and  +4 for the other two averages

Only 17 other such patterns exist, with the last five since January 2000. In the past, the following day tilted significantly to scoring gains. In this century the S&P500 has not had a decline, but moved higher all five times. Both the DJIA and the NASDAQ declined once, increasing the other four days.

You may have noticed that the NASDAQ and the S&P500 declined just twice this month, moving higher the other 13 sessions. The DJIA has 6 down days so far this month. But since the negative days of these three indices occurred separately, the total number of all three-positive-days comes to 7, so far.  Last year the three indices managed 12 such closes; in 2008 there were 11. Accordingly, this positive streak while pleasing is not uncommon and therefore should not result in new expectations of further
improvement ahead.

DJIA                    .48 percent

NASDAQ           .68 percent

S&P500               .60  percent

Another close without significant gains or losses opened the next to last week of the year. Both the NASDAQ and the S&P500 added  .25 percent whereas the DJIA lost -.12 percent. Also the NASDAQ and the S&P500 closed higher for the third consecutive day but the DJIA finished down for the second day in a row.

Strangely, this pattern has never occurred before! However, without a record, a projection based upon past patterns obviously is not possible.  Instead, today’s edition examines the configuration of closes on the fourth and fifth trading session before December 25.

The results though are identically ambiguous.  On the fifth preceding day, the DJIA and the S&P500 had 6 gains and 4 losses, while the NASDAQ record shows 6 declines and 4 increases. As for tomorrow, the fourth preceding day, the DJIA and the S&P500 posted an equal number of gains and losses whereas the NASDAQ again came in with 4 gains against 6 losses.

Regrettably these even results do not yield a basis for projecting future results.

DJIA                    -  .12 percent

NASDAQ              .25 percent

S&P500                  .25  percent

The DJIA fell again, changing direction for the fourth time in a row. Yet that decline is so small -.06 percent –that it shows up only in the second decimal place. Nevertheless  today’s close of 11,491  stands 1.16 percent above the 11,359 on December 7, just 10 trading days ago. Similarly the NASDAQ advanced  1.30 percent and the S&P500 gained 1.22 percent in this span.

While the small daily changes hide this progress, it results from the small gains being larger than the small declines. For example, yesterday’s  DJIA plus .36 is almost 14 times the size of today’s  -.26  percent loss; and the Wednesday decline of  -.17 percent offset the larger  .42 percent gain of the day before
 

At this point, these indices have recovered past their November 5 highs, with the NASDAQ now 2.44 percent higher.

Looking to the record for patterns identical to these last days, we find just seven since January 2000. On the following day, the NASDAQ closed lower five times, falling twice. The DJIA and the S&P500, however, scored five advances, having only two losing days.   

DJIA                 -.06 percent

NASDAQ          .21 percent

S&P500              .08 percent

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