April 11, 2011 Third Decline in a Row
While the DJIA actually gained .01 percent today, this analysis will consider
its close as negative. People might consider such an assumption as violating truth, yet it makes the analysis symmetrical, and minus .01 percent is not very different than plus .01 percent. The NASDAQ lost -.32 percent and the S&P500 declined -.28 percent. A total of 283 previous NASDAQ closes, since January 2000, fit in the range from zero to -.32 percent; and 350 S&P days are in the zero to -.28 percent boundary. Considering the 2,846 trading days, these events are not insignificant. They represent almost 10 percent of all NASDAQ transactions and are near 13 percent of all S&P500 changes.
Further, these small change days occur more often in bull markets than when prices are falling. Consider the 741 sessions between 2000 and 2003 when the market declined; more than 10 percent of the S&P500 changes were in the range between zero and -.28 percent. During the following decline, 2007-2009, 6 percent of the closes occurred in this interval.
In stark contrast, the frequency of small changes came to 15 percent during the 2003 to 2007 bull market. Importantly, they represent 14 percent of all S&P500 changes since then.
These combinations allow projecting further growth ahead for security prices.
DJIA .01 percent
NASDAQ - .32 percent
S&P500 - .28 percent