February 1, 2012 Best Gain Since January 25
The NASDAQ gain of 1.16 percent is its second in as many days. Better news, however, comes from the DJIA and the S&P500: they returned to the upside after posting four losses in a row. Further, today reversed the recent runs of small gains that dominated the past week.
The pattern of two NASDAQ advances paired with single day increases for the DJIA and the S&P500 is the 35th repeat since the beginning of the century. These combinations occurred almost evenly over the two bull and bear markets, betraying no propensity to dominate rising or falling prices. Yet analyzing these events more carefully, reveals a distinct difference in their frequency that favors falling markets. These closes accounted for 1.48 and 1.69 percent of all days when prices were moving lower, but they occurred on only 1.03 and .85 percent of the time during price increases.
While these are small numbers, nevertheless note that their frequency in bear markets is about twice as that of the bull market. Accordingly, todays action implies lower prices ahead.
Action on the days following this pattern was distributed equally, however, with 18 price increases and 17 declines.
DJIA .59 percent
NASDAQ 1.16 percent
S&P500 .81 percent