August 12, 2011 Finally, A Typical Day
Today the market closed without the large daily changes that dominated recent trading. Similarly, todays pattern is not so singular that prevents a price projection with statistical significant. Unlike the last several days, todays close of price change has enough repeats to allow projections with statistical significance.
The pattern, +2/-1/+1, that is two gains after a decline that follows a losing day, has occurred on 30 previous closes since the year 2000. With that record showing 18 losses and 12 increases on the following day, another advance on Monday is unlikely.
History also reveals that sustained price increases are more likely with a sequence of small daily changes. On reviewing the diagram, we see that rising prices happen more often with small daily changes (the dots); that price declines and wide, disparate daily variations go hand-in-hand.
DJIA 1.13 percent
NASDAQ .61 percent
S&P500 .53 percent
