Archive for September, 2011

September 14, 2011 Third Straight Gain

Wednesday, September 14th, 2011

September 14, 2011                 Third Straight Gain

 

Averages gained more than one percent today, the third consecutive positive session. This is the fifth repeat of three increases in a row since June 29. The last one occurred just ten trading days ago, on August 30. Note how extraordinary are these repeats: only 70 such closes exist in the 3,000 market days since the beginning of 2000.

 

Notably these three-in-a-row gains happen when prices are moving higher. We find sixty-six during the two most recent expansions; just 13 appear in the 2000-2003 and 2007-2009 declines.

 

As for the following day, in the past these were divided almost equally between a fourth straight gain and a decline. Yet curiously, positive next days outnumbered declines when prices were heading down. Similarly, during bull markets, there were 20 percent more negative than positive closes.

 

 

DJIA             1.27 percent

NASDAQ     1.60 percent

S&P500         1.35 percent

September 13, 2011 With Graph Another Advance

Tuesday, September 13th, 2011

September 13, 2011                 Another Advance

 

Prices moved up for the second day in a row, making today’s pattern +2/-2. There are 33 previous closes since 2000 with this combination. In the past, the following day moved higher 14 times but fell on 19 days. Note that Monday’s projection for today, based on that pattern, saw gains for today. Thus the forecast was correct.

 

In the past, the comparison of prices of the current, 2007 cycle, with those of the decline that began in 2000, generated a favorable profile. That comparison, updated for today’s close, provided a favorable outlook for the current cycle. While the drop in prices was steeper in 2007, it also was much shorter than in the previous cycle.

 

But that is no longer the case. The record since July 7 –when prices started their present decline- shows that now, the sharp drop has been pushing the 2011 price profile below that of the previous sequence. Today’s diagram shows the time profile of these cycles.

 

Note also, that it took 1,895 trading days before the market was able to recover to its previous high. That is nearly double the number of days since the last top began in October 2007.

 

DJIA              .40 percent

NASDAQ     1.49 percent

S&P500          .91 percent

 

 

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September 13, 2011 Another Advance

Tuesday, September 13th, 2011

September 13, 2011                 Another Advance

 

Prices moved up for the second day in a row, making today’s pattern +2/-2. There are 33 previous closes since 2000 with this combination. In the past, the following day moved higher 14 times but fell on 19 days. Note that Monday’s projection for today, based on that pattern, saw gains for today. Thus the forecast was correct.

 

In the past, the comparison of prices of the current, 2007 cycle, with those of the decline that began in 2000, generated a favorable profile. That comparison, updated for today’s close, provided a favorable outlook for the current cycle. While the drop in prices was steeper in 2007, it also was much shorter than in the previous cycle.

 

But that is no longer the case. The record since July 7 –when prices started their present decline- shows that now, the sharp drop has been pushing the 2011 price profile below that of the previous sequence. Today’s diagram shows the time profile of these cycles.

 

Note also, that it took 1,895 trading days before the market was able to recover to its previous high. That is nearly double the number of days since the last top began in October 2007.

 

DJIA              .40 percent

NASDAQ     1.49 percent

S&P500          .91 percent

 

c-2007-cycle-and-2000-2007-cycle.gif

 

 

 

 

September 12, 2011 Recovery Starts Week

Tuesday, September 13th, 2011

September 12, 2011                 Recovery Starts Week

Moderate price increases ruled the day after the tenth anniversary of 9/11. Nor did the worsening forecasts of the Euro and the deeper government debt problems of Greece and Italy push the market into the red. It was the first advance in three days, resulting in a  +1/-2/+1  pattern.  History shows this arrangement has 32 previous closes in this century.

The diagram locates these days and shows that they are more frequent when prices are rising. This news means that today’s pattern is a bull market signal.  Yet, given the remarkable volatility of prices, and previous days’ patterns associated with bear markets, caution and uncertainty rather than optimism should be the rule of the day.

Today’s illustration also provides insights for expectations of tomorrow’s results. The green circles identify gains, while the red circles show declines, on the next day. Overall,  21 of the following days had price increases. Further 14 of those came while prices trended higher.

Note that  Friday’s projection correctly anticipated  today’s increases.

DJIA              .63 percent

NASDAQ     1.10 percent

S&P500          .70 percent

 

new-up-after-2-down-after-up.gif

September 12, 2011 Recovery Starts Week

Monday, September 12th, 2011

   September 12, 2011                           Recovery Starts Week

Moderate price increases ruled the day after the tenth anniversary of 9/11. Nor did the worsening forecasts of the Euro and the deeper government debt problems of Greece and Italy push the market into the red. It was the first advance in three days, resulting in a  +1/-2/+1  pattern.  History shows this arrangement has 32 previous closes in this century.

 

The diagram locates these days and shows that they are more frequent when prices are rising. This news means that today’s pattern is a bull market signal.  Yet, given the remarkable volatility of prices, and previous days’ patterns associated with bear markets, caution and uncertainty rather than optimism should be the rule of the day.

 

Today’s illustration also provides insights for expectations of tomorrow’s results. The green circles identify gains, while the red circles show declines, on the next day. Overall,  21 of the following days had price increases. Further 14 of those came while prices trended higher.

 

Note that  Friday’s projection correctly anticipated  today’s increases.

 

DJIA              .63 percent

NASDAQ     1.10 percent

S&P500          .70 percent

 

 

 

 

September 9, 2011 Another Worse than 2.4 Percent Dip

Saturday, September 10th, 2011

September 9, 2011                 Another Worse than 2.4 Percent Dip

 

Values eroded during this shortened holiday week, that ended with Friday’s losses of -2.42 percent for the NASDAQ,  -2.67 for the S&P500 and -2.69 percent for the DJIA. Today’s pattern of two successive losses occurred on 159 days since the end of 1999. But going back to Thursday of the week before, the pattern becomes  -2/+1/-3, a sequence seen only three other times in this century.

 

Prices declined sharply after hitting their top on July 7, 45 trading days ago. The total loss for the S&P500 from then to today, amounts to -14.7 percent. While significant, this decline ranks only as the 235th worse in this decade’s near 3,000 trading days.

 

Looking to Monday, we can expect prices to recover: they did so in two of the three previous repeats of this pattern.

 

DJIA              -2.69 percent

NASDAQ      -2.42 percent

S&P500         -2.67 percent

September 8, 2011 A Decline in Roller Coaster Market

Thursday, September 8th, 2011

September 8, 2011                 A Decline in Roller Coaster Market

 

Prices fell about one percent as the up-then-down configuration continues. The record shows just twelve previous days with a -1/+1/-3  pattern in this century. Further, on the following day, prices moved higher twice as often as they declined. Accordingly, chances favor higher prices for tomorrow’s session.

 

Returning to yesterday’s market sprint – when the NASDAQ jumped  3.04 percent, the S&P500 gained 2.86 percent and the DJIA rose 2.47 percent – we noted that changes as large and larger cluster in down markets. None have occurred when prices are on their way up.

 

Today we present the diagram, with these days identified by empty circles.

 

 

 

 

DJIA              -1.04 percent

NASDAQ       -.78 percent

S&P500          -1.06 percent

 large-changes-at-lower-turning-oints.gif

 

 

September 9, 2011 Does Large Gain Signal Return to Higher Prices?

Thursday, September 8th, 2011

September 9, 2011                Does Large Gain Signal Return to Higher Prices?

 

Prices soared more than two percent as the market changed direction once again. The NASDAQ’s  3.04 percent increase ranks as the 129th largest in this century. Similarly, the DJIA  2.47 percent jump stands in the 83rd     , place; the S&P500 change is its 70th largest increase.

 

Strangely, such gains did not occur in bull markets – they came at lower turning points. There were none during the entire 2003/2007 expansion – but they clustered at the 2003 and 2009 bottoms, just before prices started a major, positive trend.

 

DJIA              2.47 percent

NASDAQ      3.04 percent

S&P500         2.86 percent

September 6, 2011 Decline Continues

Tuesday, September 6th, 2011

September 6, 2011                 Decline Continues

 

The first post vacation session extended losses to the third straight day.  Though the NASDAQ fell just  -.26 percent, the S&P500 ended off  -.74 percent, while the DJIA dropped .90 percent.

 

Today’s pattern – three successive losses – has repeated 143 times since 1950; it is the 56th in this century. These are distributed almost equally between bull and bear market phases.  However, such relationships do exist for the following day: rising markets have twice as many decreases as increases, while they are equal when prices trend down.

 

Further, increases outnumbered declines 33:22 on the next day.

 

DJIA              -.90 percent

NASDAQ      -.26 percent

S&P500         -.74 percent

September 2, 2011 Sixth Substantial Loss

Monday, September 5th, 2011

September 2, 2011                 Sixth Substantial Loss

 

With values falling more than 2 percent, today is the sixth sizable decline in last 23 trading days. This count includes at least three drops deeper than 4 percent since the beginning of August. It is prudent, therefore, to consider if the market has seen its top already, and is now in retreat.

 

The S&P500 reached its highest recent close on August 7; therefore, by assigning 100 percent to this value, we can compare this top with the last two highest market prices in 2000 and 2007.

 

That diagram shows clearly that the past S&P500 cycles and current prices share almost identical proportional losses in the immediate days after reaching their tops. It reveals also the 2011 decline as much sharper than in the previous two cycles.

 

We see also identical loss profiles for the three cycles during days 20 and 50 after prices decline from their peak values.

 

Note however one significant difference not revealed by this diagram: the current S&P500 so far has failed to return to its previous peak value of October 2007 before declining. However, the two earlier cycles did recover to the previous high before turning down.

 

 

 

 

DJIA              -2.25 percent

NASDAQ      -2.65 percent

S&P500         -2.59 percent

 

 

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