USMarketView

September 1, 2011                 First Down Day in a Week

After four straight advances, prices fell, with the NASDAQ losing  -1.30 percent, the S&P500 off  -1.19 percent, and minus  -1.03 percent for the DJIA. While logic might say that prices were bound to fall after four days of gains, the record contradicts this common sense belief.

Overall, since 1950, prices moved higher on 35 days, scoring a fifth successive gain, against only 29 declines after four straight increases.  Further, considering only the past 12 years in this century, the count is almost even, with 10 advances and 11 declines.   

A note of caution for tomorrow – note the wide range of changes on the day following today’s pattern. These extended from -2.91 percent to plus 4.14 percent.

Also for tomorrow – in the past, gains outnumbered losses by a factor of almost three.

DJIA              -1.03 percent

NASDAQ      -1.30 percent

S&P500         -1.19 percent

That prices are on a four day run is welcome news.
More significant is their timing: with 24 repeats since 2000, 20 occurred while
prices were trending higher. Our ongoing focus on ‘the when’ of these positive
runs yields relevant insights because the trend of prices is more critical than
their daily changes.

Turning to the following day, Friday, in the past
the next sessions were divided almost equally between another positive close
and a decline. Moreover, the counts were identical: five gains and five losses
in both the 2003/2007 and the current since-2009 expansion.

DJIA               .46 Percent

NASDAQ        .13 Percent

S&P500          .49 Percent

That prices are on a four day run is welcome news.More significant is their

timing: with 24 repeats since 2000, 20 occurred while
prices were trending higher. Our ongoing focus on ‘the when’ of these positive
runs yields relevant insights because the trend of prices is more critical than
their daily changes.

Turning to the following day, Friday, in the past
the next sessions were divided almost equally between another positive close
and a decline. Moreover, the counts were identical: five gains and five losses
in both the 2003/2007 and the current since-2009 expansion.