February 8, 2012 Another Gain But Changes Remain Small
The three indices moved higher for the second day in a row, with the NASDAQ rising .41 percent, the S&P500 adding .22 percent and the DJIA increasing .04 percent. These magnitudes are far below the average daily gain between January 2000 and today. The DJIA daily change averaged .80 percent, some 20 times larger than the one posted today. The NASDAQ and the S&P500 gains have similar proportions, with the formers daily mean change of .77 percent while the daily S&P500 gain averaged .88 percent.
Yet on average, daily advances when prices decline outperform those in bull markets. Consider the data for the S&P500. Its mean daily gain in the bear market of 2000/2003 was .82 percent; this fell to .52 percent in the following 2007/2009 advance. Similarly, during the following decline, the average daily gain rose to 1.37 percent while the current, since 2009, upswing gain came in at .77 percent.
Looking ahead, expectations for tomorrows market are evenly divided between another gain and a decline. The record shows 220 closes with todays pattern, with the following days split evenly between losses and gains.
DJIA .04 percent
NASDAQ .41 percent
S&P500 .22 percent