Archive for October, 2011

Protected: October 14, 2011 Does Today’s Pattern Signal Lower Prices?

Saturday, October 15th, 2011

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Protected: October 13, 2011 A Mixed Day

Thursday, October 13th, 2011

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Protected: October 12, 2011 Gains Continue

Wednesday, October 12th, 2011

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Protected: October 10, 2011 Substantial Gain … More to Come?

Monday, October 10th, 2011

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Protected: October 7, 2011 Losses End Week

Saturday, October 8th, 2011

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October 6, 2011 Rally Posts Third Gain in a Row

Thursday, October 6th, 2011

October 6, 2011             Rally Posts Third Gain in a Row

 

 

Prices continued to move higher, rising near two percent, as the market closed higher for the third day in a row. Previously, since the beginning of 2000, 72 sessions posted three successive gains.

 

Further, this pattern shows a high correlation with a trend of rising prices. While only 12 of these days occurred during the two bear markets of the 21st century, the other 60 paired with the 2003/2007 and the 2009/today rising prices periods.

 

The next day, in the past, however, does not provide encouraging news for tomorrow. While the DJIA moved higher on 40 days, falling on the other 32 repeats, the NASDAQ, however, shows the opposite distribution, with 40 declines and 32 advances. Negative days also outnumber gains for the S&P500, 38 to 34.

 

Yesterday’s projection for today was a rather weak expectation for further gains; it failed to anticipate today’s strong showing.

  

 

 

 

DJIA             1.68 percent

NASDAQ     1.89 percent

S&P500         1.83 percent

October 5, 2011 Gains Continue

Wednesday, October 5th, 2011

October 5, 2011             Gains Continue

 

Though not as much as yesterday, prices of the three indices moved higher. The resulting pattern, of +2, has occurred 214 times in this century. Since these have been distributed almost equally, percentage wise over the two expansions and two contractions, today’s close fails to provide a basis for any insights into future prices.

 

Looking at the following day for this pattern, the S&P500 had almost an equal number of declines and increases in the past. The NASDAQ record shows 114 advances and 100 declines; the DJIA has the opposite distribution, with only 90 increases and 124 losses.

Unfortunately, these results fail to provide a basis for projecting price changes for tomorrow.

 

   

 

 

 

          DJIA             1.21 percent

          NASDAQ     2.32 percent

          S&P500       1.79 percent

October 4, 2011 Strong Advance

Tuesday, October 4th, 2011

October 4, 2011             Strong Advance

 

       The NASDAQ finally closed higher after four straight declines, gaining 2.95 percent. Today is its largest increase since the beginning of September, some 25 trading days ago. Yet today’s closing price has not recouped to that earlier level. The S&P500 also had a good day, gaining 2.25 percent, similarly the DJIA moved up 1.44 percent.

      

       Today’s pattern of one increase after four declines –for the NASDAQ- and one increase after two losses for the DJIA and the S&P500, is only the third occurrence since the beginning of 2000. In the past, these days split evenly between an increase and a decline.

 

       Yet a favorable, if not an outright optimistic, outlook results when comparing this current, since March 2009, expansion with the previous full price cycle of 2000/2007. Today’s figure plots both these cycles from their highpoints – the day before prices started their drop.

 

       While we have noted their similarities before, focus on the present drop and contrast it with the overall direction of the previous cycle. The time path of the current cycle seems to coincide with a pause in the earlier profile. Of course, today’s reaction dwarfs the previous one, yet their timing coincides. Further, if prices in the near term future replicate the earlier cycle, we will avoid a deeper drop, instead enjoying a slower and less vigorous expansion than in the past two years.

 

 

 

DJIA             1.44 percent

NASDAQ     2.95 percent

S&P500       2.25 percent

 

 

2007-top-to-current-cycle.gif

Monday, October 3rd, 2011

October 3, 2011             More Losses

 

 

         Today’s NASDAQ fell again, dropping -3.29 percent; only 109 other closes, of the nearly 3,000 trading days since January 2000, are this bad, or worse. Similarly, the S&P500 closed at -2.85 percent, recording its 75th steepest decline; while the DJIA, off -2.36 percent ranks as its 97th largest loss.

 

         The diagram of the S&P500 locates these 75 losses, worse than  -2.85 percent over the past 12 years. Most happened during the two major declines of 2000/2003 and 2007/2009. Yet we see some 13 since the recovery started in March 2009.

 

          Worse yet, five other recent closes show declines deeper than today’s -2.85 percent.

 

        This evidence, based on the size of the loss, surely contradicts the recent optimistic interpretations using the pattern of daily closes. These latter versions revealed a relationship occurring mostly while the trend of prices was up.

 

       We shall continue to monitor these two indicators, to find their relationship and their efectiveness to project future price movements.

 

 

DJIA             -2.36 percent

NASDAQ     -3.29 percent

S&P500       -2.85 percent

 

 

 

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September 30, 2011 Worst Drop in a Week

Sunday, October 2nd, 2011


 

 

         Losses exceeding more than two percent pushed prices back to last Thursday’s levels. Prices moved down all day and never recovered. It was the NASDAQ’s third decline in a row, but just the first for the DJIA and the S&P500, after their declines on yesterday.

 

        It is the 18th repeat, since January 2000, of this pattern.  The diagram shows the S&P500 closes for this period and identifies the dates of these previous occurrences.

 

        Note how more often these days happen during bull markets, and how rarely during periods of declining prices. Whereas the tone of the market –the commentary explaining the fall in prices- is down.

 

      Nevertheless, as readers of this commentary well know, these previous and recent patterns have been identified most often with bull markets.  

 

        The diagram also indicates the direction of price changes on the following day.  While gains outnumber declines, because that margin is merely 14 to 12, it is not possible to make a reliable projection.

 

The outlook, published yesterday for today’s market –declines- is   correct.

 

DJIA             -2.16 percent

NASDAQ     -2.63 percent

S&P500       -2.50 percent

 

 

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