Prices continued to decline for the second day in a row. Yet at the close, losses were smaller than the day before. The NASDAQ fell -.77 percent and the S&P500 declined -.13 percent; the DJIA, however, was just .03 percent short of the positive side.
The pattern of recent changes yields a -2/+2 profile, making todays change the 36th repeat since the beginning of 2000. The following day though does not leave much room for recovery on the following session. In the past, these indices had almost twice as many drops as increases in the next session.
Yesterdays blog featured a quantitative forecast discussing the S&P500s expected close on December 31, 2011. Today we treat the NASDAQ. The diagram reveals the relationship between the price changes of January and the year-over-year changes on the last trading day of the same year.
Of course, this is far from a reliable predictor; however, note the frequency of positive January and positive year changes. Most of the negative January changes also coincide with the annual declines in the NASDAQ.
Indeed, only ten of the January changes yield an opposite sign for the following 12-month period. In the other 30 some years, the January gain or loss parallels the year over year change in the December-to-December price variation.
DJIA - .02 percent
NASDAQ - .77 percent
S&P500 – .13 percent