August 11, 2011 Large Gains Offsets Yesterdays Deep Drops
While prices continue to whiplash up and down, the more essential character of this market involves the size of these daily, almost offsetting, changes. Our earlier posts have already detailed their relative size: these rank in the top or bottom 35 of the 15,000 daily closes in our database that starts in 1950.
Todays figure places these outsized changes on the graph of the S&P500 daily closes over the last 12 years. These cluster around the two major downturns, of 2000/2003 and 2007/2009. They have never occurred at market tops. Nor can these large gains and losses forecast the end of the decline or the beginning of the upturn.
Telling also is their absence both plus and minus- when lengthy runs of price increases dominate the action.
These characteristics, nevertheless, fail to provide a clear signal of the direction of prices in the future except to confirm that the recovery, started in March 2009, has run into a strong counter current.
DJIA 3.92 percent
NASDAQ 4.69 percent
S&P500 4.63 percent
