March 14, 2011 Limited Declines Follow Japans Disaster
Prices moved lower all day, yet at the final bell losses were less than a full percentage point. The S&P500 felt the biggest hit of -.60 percent, while the NASDAQ lost -.54 percent. The DJIA fall off was -.43 percent. Moreover, todays pattern of a loss, after a gain, which followed two losses in a row, is far from rare, with 27 repeats since 2010.
The diagram below, identifying these 27 days is revealing; it shows that this pattern is a characteristic of prices trending higher. Just seven of these incidents crossed the tape during the 2000/2003 and the 2007/2009 bear market. All the other incidents -20 out of 27- arose in the 2003/2007 and the current expansion.
It is not surprising that prices fell, given the catastrophic news from Japan. Yet, at least so far, the markets reaction of limited price declines to the worsening spread of damage and personal tragedy implies significant strength of, and confidence in, the worlds business situation.
P. S. Back from the flu, its effects seem more reasonable now than when I was under its command, and numbers and thoughts failed to register in my mind.
DJIA -.43 percent
NASDAQ -.59 percent
S&P500 -.60 percent