Archive for June, 2011

June 16, 2011 Another: NASDAQ Declines, DJIA and S&P500 Rise DJIA and S&P500 Rise

Friday, June 17th, 2011

June 16, 2011    Another: NASDAQ Declines,      DJIA and S&P500 Rise

 

 

 

Usually, all security prices change in the same direction, but today the market repeated the unusual pattern of the NASDAQ falling while the DJIA and the S&P500 moved higher. There have been fewer than 175 of these in the 2,900 trading days since 1999. Yet, these share a distinct feature during market declines, (1) they occur more often, and (2) there are more declines on the following day.

 

Only 4 percent of the 570 sessions since March 2009, when the current market phase began, had this feature; the previous decline had more than 6 percent.

 

While the following day’s prices fell  64 percent of the time during the 2007/2009 decline, since then only 30 percent declined.

 

Furthermore, the same proportions held during the earlier cycles since 1999.

 

Thus, the price pattern of these indices tomorrow, June 17, could project the market’s direction in the future. A repeat of a NASDAQ decline paired with increases in the DJIA and the S&P500, implies that the market will turn further down in the future.

 

 

DJIA               .54 percent

NASDAQ      -.29 percent

S&P500           .18 percent

 

 

(Published June 17, 2011)

June 16, 2011 SORRY — NO POST TODAY

Friday, June 17th, 2011

June 15, 2011 Largest Drop in 10 Days

Wednesday, June 15th, 2011

June 15, 2011              Largest Drop in 10 Days

 

 

 

The market took back more today than it granted yesterday as prices suffered their worst session since June 1. The NASDAQ lost  -1.76 percent and the S&P500 fell  -1.74 percent; the DJIA, at  -1.46 percent sustained the smallest setback. Though substantial, the S&P500 losses ranked as the 214th deepest in the 2,900 trading days since the end of 1999. The DJIA’s setback is the 245th while the NASDAQ stands at 388.

 

Yet these large losses do not translate automatically into falling prices in the future. The record reveals that the majority of these large price reversals hit at the bottom of declines, just before or just after prices hit bottom. Though only a few occur at market tops, our analysis so far has not pinpointed if this current set indicates a decline or an increase in the days ahead.

 

The odds for tomorrow, based on the current pattern, favor a further decline. In the past prices on the next day fell three times more often than they increased.

 

DJIA             -1.48 percent

NASDAQ     -1.76 percent

S&P500         -1.79 percent

June 14, 2011 Largest Increase in 10 Days

Tuesday, June 14th, 2011

June 14, 2011              Largest Increase in 10 Days

 

While each of the three averages enjoyed the best day since May 10, some ten trading days ago, the NASDAQ led the field, adding 1.48 percent. The S&P500 gained 1.26 percent and the DJIA improved 1.03 percent.

 

Comparing these changes to the 112 closes earlier this year, note that the DJIA had only 10 advances greater than 1 percent, and the S&P500 scored eleven. The NASDAQ did much better, having 4 greater than 2 percent closes and 14 exceeding 1 percent.

 

These results lag last year’s performance, then the NASDAQ had 22 advances larger than 1 percent, while both the DJIA and the S&P500 enjoyed 18 such days between January and the end of June.

 

History is unable to provide guidance for tomorrow based on the performance on the day after this pattern. Both the NASDAQ and the S&P500 moved higher on four of the ‘nine-next-days.’ But the DJIA advanced only three times, losing ground on the other six sessions.

  

 

DJIA             1.03 percent

NASDAQ      1.48 percent

S&P500        1.26 percent

 

 

June 13, 2011 Does Mixed Day Show Upward Promise?

Monday, June 13th, 2011

June 13, 2011              Does Mixed Day Show Upward Promise?

 

Prices closed with just minute changes as the NASDAQ lost -.15 percent but the S&P500 gained  .07 percent and the DJIA eked out  .01 percent.  Just 150 previous days have this profile, with only 31 since 1999.

 

The most obvious interpretation is to pigeonhole this pattern with other days of negligible movements: the result of investors’ hesitation to commit without further indications of which direction the economy, and the market, will take. Yet the NASDAQ history of days in the range of zero to minus .15 percent allows an interpretation of rising future price.

 

Today’s diagram focuses on the NASDAQ closes since 2000; each of the red dots identifies a day of change in the zero to minus .15 percent range. Notice the concentration of these clusters when prices are rising. They amount to 6.8 percent of all closes during the 2003/2007 expansion, but only 2.6 percent and 4.2 percent during the two adjacent contractions. Similarly, they amount to 5.4 percent of all days since the March 2009 price recovery.

 

Consequently, it seems appropriate to consider these ongoing side-moving days as signaling higher prices in the future.

 

DJIA             .01 percent

NASDAQ    -.15 percent

S&P500         .07 percent

 

 

nasdaq-closes-between-zero-and-15-percent.gif

June 10, 2011 Down Again

Saturday, June 11th, 2011

June 10, 2011                  Down Again

 

Values tumbled, more than wiping out yesterday’s come back. The pattern at week’s end stands at -1/+1/-6 for the DJIA and the S&P500, whereas the NASDAQ position is -1/+1/-4.

 

Our analysis replaces the different three-days-ago numbers with ‘further than minus three’ in order to consider all three indices at once. The resulting diagram identifies the twelve days for this pattern, with the number indicating the NASDAQ pattern.

 

It reveals this combination hovers at turning points, with two happening at market tops and two coinciding with troughs. Accordingly, we have only a weak conclusion: the market trend will change. It implies that current price instability, the up then down sequences, will end. However, we cannot project whether prices will move higher or lower! 

 

Yet this history implies an end to the recent, almost daily changes in market direction, and a future that allows projections of forthcoming price movements

 

 

DJIA            -1.42 percent

NASDAQ     -1.53 percent

S&P500        -1.40 percent

 

 

 

smaller-minus-1-plus-1-minus-more-than-minus-3.gif

June 9, 2011 Finally Prices Move Higher Prices

Thursday, June 9th, 2011

June 9, 2011                  Finally Prices Move Higher

 

Prices edged up today, for the first advance this month. Of course, the string of daily declines had to stop some time. Yet we were fortunate that this continuum of negatives stopped at six successive sessions. Furthermore,    today’s changes have substance: the DJIA gained .74 percent; the S&P500 added .63 percent while the NASDAQ rose  .35 percent.

 

That only two previous repeats of a six-day reaction show up in the record book reveals the abnormality of such a long chain. Moreover, these existed in the distant past: 1991 and 2000.

 

On the following day, the NASDAQ headed down again but the DJIA and the S&P500 moved higher.

 

The two diagrams in yesterday’s post revealed these lengthy negative runs past cluster near the end of extensive positive price changes. Of course, these incidents may not, as they did in the last two price cycles, lead to further declines.

 

Nevertheless, this recent incident suggests that we are now in a time requiring careful analysis, rather than jumping in or continuing with existing investment plans.

 

 

DJIA             .63 percent

NASDAQ     .35 percent

S&P500        .74 percent

June 8, 2011 Another Loss – the Sixth in a Row

Wednesday, June 8th, 2011

June 8, 2011                  Another Loss – the Sixth in a Row

 

 

It’s hard to believe that prices fell again! The last time the combination- six successive declines of the DJIA and the S&P500 combined with a four-day decline of the NASDAQ- occurred was in 1978.

 

Clearly, runs this long are rare. Yet the more significant part of these chains of down days is that they parallel market tops. Today’s two diagrams show these incidents near the market tops of March 2000 and of October 2007.

 

A brief look reveals the long runs clustering near market reversals. Enough said.

 

DJIA             -.18 percent

NASDAQ     -.97 percent

S&P500         -.42 percent2007-showing-5-clusters.gifa.gif

June 7, 2011 Fifth Loss in a Row

Tuesday, June 7th, 2011

June 7, 2011                  Fifth Loss in a Row


 

 

Prices failed to maintain their gains, then declined and finished in the red. It was the fifth straight decline for the DJIA and the S&P500. While the negative NASDAQ close was only its third successive loss –because the index managed a  .15 percent advance in one of the in-between days- it does not change the score sufficiently to include it in today’s pattern analysis. Thus the reckoning will use only the five successive DJIA and S&P500 loss sequence.

 

The diagram of our usual S&P500 closes indicates twelve such previous experiences since 2000. Five occurred during the 2000/2003 decline and three others came in the recent 2007/2009 drop. Further, their timing coincides with declines. Additionally, even in the 2003/2007 rally these events came immediately before price declines.

 

Yet these days cluster also just before prices change direction, as in 2003 and 2009.

 

This evidence makes it clearly illogical to conclude that these events are not systematically related to future declines. Further, we note that today’s pattern is the second recent repeat of a turn in the market. Certainly, experience indicates that this sequence is not, has not in the past, been associated with further price advances. Accordingly, it contradicts the many previous diagrams that show the day’s pattern associated with further increases in asset appreciation.

 

DJIA             -.16 percent

NASDAQ     -.04 percent

S&P500        -.10 percent

 d-and-s-down-5-in-a-row-nasdaq-rate-not-included.gif

 

June 6, 2011 Drop Continues

Monday, June 6th, 2011

June 6, 2011                  Drop Continues 

With the DJIA and the S&P500 falling for the fourth day in a row, they lost not only their advances gained over the just completed four increases in a row, but also their prices dropped to the levels of mid-March. The NASDAQ, which retreated only for the second successive day, nevertheless, fell also to its March price. 

The last five trading days cost the NASDAQ  -4.68 percent, the S&P500 gave up  -4.39 percent while the DJIA retreated  -3.81 percent.   The pattern of closes, with the NASDAQ at -2, the DJIA as well as the S&P500 at -4, is exceptionally uncommon: only 26 were reported since 1950, while today’s is just the third in the last 12 years. The next day’s changes in the past were negative twice, with just one gain. 

Where will the market go from here? The data unfortunately do not have an answer to this most important question. Regrettably, we need to wait, just like everyone else, for the forthcoming days.  DJIA             -.50 percentNASDAQ    -1.11 percentS&P500        -1.06 percent