May 19, 2011 A Positive Signal?
Contrary to yesterdays negative outlook, one further day of history generates an opposite inference! The diagram identifies with a red circle, each of the 9 days, since 2000, when the market closed with three straight NASDAQ gains while the DJIA and the S&P500 both had just two positives in a row. The numbers next to the circles indicate the percentage gain by the S&P500.
Focusing on the magnitude of these changes, note that the three incidents occurring when prices were trending down are much larger than during the following uptrend. Changes on two of the days with falling prices exceeded one percent, while all rates are smaller than one percent when the market is in a bull phase.
While this relationship, based on just nine observations, is far from robust, it nevertheless could be allowing us a glimpse into the future.
The projection for tomorrow based on past results calls for declines, given that earlier next days had twice as many losses as gains. Note that the positive forecast for today was accurate.
DJIA .36 percent
NASDAQ .30 percent
S&P500 .22 percent
