April 19, 2011 Prices Recover
The DJIA and the S&P500 managed to recoup near half of Mondays losses, but the NASDAQ, while also moving higher, regained only a third of its loss. The pattern of the day fails to provide a useful outlook for tomorrow: either there are too many repeats -1,183 in all- of the three indices moving up for one day, or all three indices falling the day before or there are too few. Only three other closes since 1950 have todays pattern.
While the slowing of the markets advances is far from welcome, note the far more rapid recapture of this price cycle than the previous, 2000-2007 sequence. Further, even the recent pause has failed so far- to wipe out this advantage.
A thought concerning the near universal attribution of yesterdays losses to the credit mark down of our Treasurys debt. Surely, the ability to redeem in cash, without losing value, underlies the value of all assets. And yes, the magnitude of the national debt and its financing has become a major concern. Yet the markets response of just a little more than a one percent loss seems a most modest reaction to such a world-shaking catastrophe.
DJIA .57 percent
NASDAQ .35 percent
S&P500 .57 percent