February 27, 2012 Another Day of Small Changes
The DJIA opened the week down -.01 percent, the exact same markdown as on Friday of last week. Meanwhile the NASDAQ and the S&P500 closed higher for the third successive session. A pattern so rare that it occurred just once before, on December 20, 2010, thus obviously not useful for projecting when and how this combination will occur again.
But if the analysis shifts from how often to focus on how much daily percentage changes, we observe a useful insight. Further, concentrating on only small daily downs and ups between -.02 percent and +.02 percent- the diagram reveals their preponderance in bull markets. Yet these days seem near absent when prices retreat.
There have been 58 market days when the range of the daily DJIA changes came in between -.02 and +.02 percent. With just 11, or .92 percent occurring over the two bear markets while 47, or 2.4 percent hit during the two rising prices segments, it seems almost obvious that these combinations are bull market friendly.
Additionally, these same conclusions apply to the NASDAQ and the S&P500: small changes in their daily values cluster when prices are trending up.
DJIA -.01 percent
NASDAQ .08 percent
S&P500 .14 percent