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            January 13, 2012                Regularity and Losses End Week

 Today’s declines are the first in five trading days for the NASDAQ, in four days for the S&P500, and after Thursday’s limited DJIA advance. So far, there have been 466 such -1 days since January 2000. These account for about 16 percent of all closes in the past 12 years.

Only two possible outcomes are possible for the following trading day; a further decline, to two losses in a row, or an increase and a pattern of -1/+1. In the past, increases occurred more frequently than a second straight loss. Prices moved higher some 56 percent of following days, leaving just 44 percent falling for two succeeding days.

 The frequency of these following day ups and downs do correlate with eras of falling and rising price trends.  The ratio of next day price increases to decreases is just 80 percent during the 2000/2003 decline, while it rises to 158 percent in the following bull market. Similarly, the 2007/2009 drop saw  1.36 as many increases as declines, and the following, current phase ratio is 153 percent.

These differences do allow the inference that prices will continue to rise, since the current ratio of increases to decreases is [1] almost as large as during the 2003/2007 expansion, and [2] substantially larger than during the two previous declines.

The declining price projection for today was realized.

 

  DJIA             .17 percent

 NASDAQ      .51 percent

S&P500         .23 percent

This entry was posted on Sunday, January 15th, 2012 at 12 122012000000Sun, 15 Jan 2012 00:27:42 +0000 and is filed under Market Report. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.