USMarketView

September 29, 2011              A Split Day

Prices moved down all day, but near the end the DJIA and the S&P500 moved higher, gaining  1.30 percent and .81 percent; the NASDAQ, however, failed to make it out of the red, closing down  -.43 percent.

Today’s analysis, therefore, reflects the history of  +1,+1,-2, for the S&P500, DJIA and the NASDAQ, combined with Tuesday’s pattern +3 for all three indices.

Only four such days happened since the turn of the century. Importantly for understanding the future, three happened during the 2003/2007 expansion and one just last month. August, as we know, endured a large loss. To sum up the past, today’s pattern tends to occur when prices trend higher.

Accordingly, today’s pattern, like many other recent closes, belongs in the ‘prices are rising’ category.

Yesterday’s projection of higher prices for today was partially correct: The NASDAQ fell. The outlook for tomorrow is negative; the past saw declines twice as often as gains

DJIA              1.30 percent

NASDAQ      -.43 percent

S&P500           .81 percent

September 28, 2011              Market Turns Down

Though prices declined, the history of today’s pattern of  -1/+3  continues to confirm the market’s status as expansionary. Of the 26 such days since the beginning of this century, 21 occurred during the expansions of 2003/2007 and since the lower turning point of March 2009.

As for the expectation for tomorrow, based on the record of these same pattern days, gains are likely. Of the above-mentioned history of the 21 expansion days, prices moved higher 18 times on the following day.

Yesterday’s projection of falling prices for today was correct.

DJIA              -1.61 percent

NASDAQ      -2.18 percent

S&P500        -2.07 percent

September
27, 2011              Gains Continue

Our three indices moved higher for the third successive
day, with each gaining more than one full percent. The pattern +3 has occurred some
230 times since the start of our database, in 1950.  However, only 71 came since the beginning of
2000.

Today’s diagram shows that most of these later 71
days cluster in the two bull markets; also that only 13 came during the two
declining phases. This distribution allows the fair inference that prices will
continue to move higher, and that the current expansion is not at its end.

The color of each point indicates the following day’s
result; with green  designating price
increases, and red price decreases, on the following day. Strangely enough,
though, the proportion of plus days is larger when prices are heading down than
when they are moving up.

Sixty-two percent of the following day’s closes moved
higher during the two bear markets, whereas only 45 percent moved higher during
the two bull phases.

DJIA              1.33  percent

NASDAQ      1.20  percent

S&P500        1.07 percent

September 26, 2011              Large Gains Open Week

Prices enjoyed their second straight advance. Both the DJIA and the S&P500 rose more than two percent while the NASDAQ was up 1.35 percent. Usually –more than 53 percent of the time- the NASDAQ outperforms the other two indices, but today was different. However, this may be just an inadvertent happening; we have not found any relationships that explain this relationship.

The pattern of back-to-back advances is quite common, with 213 since the beginning of 2000. The outlook for the following day does not look promising for the DJIA. In the past, it moved higher only 89 times while the index fell on 124 occasions. Here again, so far no correlation has been found to explain these differences.

The S&P500 next day closes were almost evenly divided, yet losses outnumbered increases by 109/104.

Only the NASDAQ has a record of more increases -115- than decreases -98- for the following day.

DJIA              2.53 percent

NASDAQ      1.35 percent

S&P500         2.33  percent

September 23, 2011               First Positive Close

Finally on Friday, the last trading day of the week, the market turned positive. But not by much: the DJIA’s move of  .61 percent ranks behind 7,000 other, larger closes. The NASDAQ and the S&P500 closes, of  1.12 and .61 percent, are well back in their rankings as well.

Further, the history of four declines in a row shows this com

September 22, 2011               Market Losses Exceed MINUS Three Percent

Prices dropped again, for the fourth straight day. The DJIA fell -3.51 percent, the NASDAQ was off  -3.25 percent and the S&P500 lost  -3.19 percent. Overall, in the 38 trading days since August 1, the S&P500 plunged 13.4 percent.

Today’s diagram shows the S&P500 [in beige] closing prices, beginning in 2000.  The vertical lines separate the bear and bull phases over these 12 years. The black line shows the percent change between today and 38 trading days ago, for each day in this century.

This perspective steps back from each day and allows comparisons of the more than 3,000 trading days in this period. It shows that the present 38-day decline is just about the worst since the recovery started in 2009. Yet it also reveals that 38-day losses worse than today’s were quite common.

Finally, notice the small range of this 38-day average during the 2003/2007 expansion. Certainly, the current expansion, since March 2009, has a far wider range – greater 38 day variance. Yet, the profile of the 38-day price changes is far greater in all the other periods.

This perspective then reveals that the recent deep price declines, while unwelcome, of course, are not very unusual; that we have had instability and huge daily changes quite frequently in these years; and that these could be the result of many other factors than our weak economy and the European problems with liquidity.

DJIA             -3.51 percent

NASDAQ     -3.25 percent

S&P500        -3.19  percent

September 21, 2011               Fifth Plunge Since August 10

The three indices dropped near three percent as the NASDAQ and the S&P500  fell for the third day in a row. In the last 29 trading days, since the beginning of August, alternating and large price changes have overwhelmed trading. Today’s deep loss came just eight days after these indices lost more than two percent; and that followed, by four days,  a more than two percent loss.

Still earlier, these prices nose-dived more than four percent first on August 10 and then, six days later again more than four percent on August 18. Yet the market also scored similar large increases: five days had gains ranging from two to more than five percent.

Another issue will feature analysis and comparisons of these fluctuations.

The pattern of Wednesday’s market – three successive losses for the NASDAQ and the S&P500 combined with the single decline of the DJIA- has occurred only 11 previous times since 1999.  Unlike previous closes, these patterns do not divide systematically between bull and bear markets. On the following day, losses outnumbered gains about two to one.

DJIA             -2.49 percent

NASDAQ     -2.97 percent

S&P500        -2.94 percent

September 16, 2011                 Fifth Gain in a Row

The market’s positive roll continues, realizing the fifth straight advance for the DJIA, NASDAQ and the S&P500. Further, these sequences cluster in bull markets. Yes, some appear when prices are trending down, but the large majority arise in bull markets. For example, consider today’s close: it is just the 11^th repeat since 2000 of five up-ticks in a row for these three indices; only one came when prices were heading down. The other nine occurred during the 2003/2007 and the 2009/2011 upturns.

But be aware, because this configuration of ‘all three indices’ is a unique and arbitrary sampling, and one that applies only to the DJIA, the NASDAQ, and the S&P500. Their spillover to the entire market is without guarantee.

Further, the apparent association of these runs with market advances holds only when all three indices share this simultaneous string. The record shows many closes where only one, or two, of these indices enjoy lengthy positive runs – these however have no relationship with rising or declining price trends.

The market confirmed yesterday’s projection for further gains today. The outlook for the following day, Monday, shows even odds for declines and advances.

DJIA             .66 percent

NASDAQ     .81 percent

S&P500         .57 percent

September 15, 2011                 Fourth Positive Day Signals Good Times

Today’s analysis parallels yesterday’s: four advances in a row occurred only 25 times since 2000, yet there have been three others earlier this year. These were on May 30, April 29 and February 3 – a period of near uninterrupted rising prices that lasted until the beginning of July.

Whereas there were 20 runs of four-daily-gains-in-a-row when prices were rising, only five happened while prices were tending down. (See the diagram below.) Note also the distinct difference of price changes on the following day. There was only one close with a next day advance while prices were falling but there were ten during the two expansion periods.

Finally, the fact that prices continued to move higher during and after the three earlier runs this year, indicates their relevance for projecting future price movements

DJIA             1.66 percent

NASDAQ     1.34 percent

S&P500         1.72 percent