December 15 Small Gains after Three Losses Will Prices Regain 2010 Close?
The first positive close in four days did not do much to prices, as the DJIA moved only plus .38 percent. The S&P500 added .35 percent and the NASDAQ improved .07 percent. The pattern over the last four days, +1/-3, has 29 previous appearances since the beginning of 2000.
Their frequency has been rising over the last 12 years. Using our usual four stages since 2000, they occurred in .67 percent of all closes between 2000 and 2003. They increased somewhat to .87 percent between 2003 and 2007. The percentage increased to 1.13 percent in the following decline. Currently, their rate has increased to 1.27 percent.
With about 10 more trading days in 2011, we ask what are the chances that the these prices will return to, or better, last years final close. So far, at this point, the DJIA stands at 101.7 percent of the last 2010 close. However, given the downward trend since this summer, the DJIAs last 2011 price could be less than the 2010 close.
The NASDAQ needs to gain at least 5.9 percent from todays close to reach the 2010 close. The target for the S&P500 is plus 5 percent or it will close lower than at the end of last year.
We projected a positive close for today, and prices did move higher. For tomorrow, based on the history of this pattern, chances are 4:3 for a lower close.
DJIA .38 percent
NASDAQ .07 percent
S&P500 .35 percent