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May 25, 2012 Another Long Term Negative Signal

Prices closed lower on the last session before the long holiday weekend,with the NASDAQ down for the second straight day. This is the 34th repeat of the DJIA and S&P500 down one day and the NASDAQ down two straight days since the beginnng of 2000.

The diagram locates these days, with the green triangle locating the 12 which closed higher on the following day. The red circles show the 22 negative following days.

Clearly, this combination occurred almost twice as often when prices were on the way down.

DJIA -.60 percent

NASDAQ -.38 percent

S&P500 -.22 percent

May 25, 2012           Another Long Term Negative Signal

Prices closed lower on the last session  before the long holiday weekend,with the NASDAQ down for the second straight day. This is the 34th repeat of the DJIA and S&P500 down one day and the NASDAQ down two straight days since the beginnng of 2000.

The diagram locates these days, with the green triangle locating the 12 which closed higher on the following day. The red circles show the 22 negative following days.

Clearly, this combination occurred almost twice as often when prices were on the way down.

DJIA                       -.60 percent

NASDAQ               -.38 percent

S&P500                 -.22 percent

May 22, 2012                                      Not Much Change

The NASDAQ closed lower, but just by  -.29 percent, while the DJIA and the S&P500 added only .01 percent and .05 percent. Though the market’s position remained in place, the pattern of a loss for the NASDAQ with the other two averages moving up for two days in a row, provides some insights.

On the following day in the 36 other identical closes since 2000, prices advanced 21 times while falling on the other 15 days.   But with more  of these closes occurring while prices were trending down, the longer term outlook shows little sign of higher prices in the near future.

DJIA                       .01 percent

NASDAQ              -.29 percent

S&P500                 .05 percent

May 21, 2012                   Strong Rebound

The NASDAQ ended the troubling five day losing streak with a 2.46% gain – a gain so substantial it ranks as its 268^th largest of the more than 10,000 closes. Similarly, the S&P500 added 1.68%, ranking as the its 627^th largest since 1950. The DJIA, was up 1.09%.

These positive closes, moreover, differ from the following day history after six successive losses: those either continued negative or posted just fractional advances.

Turning to the following day, in the past the S&P500 managed another advance only 46% of the time, whereas the odds for a positive DJIA close are 55% and the NASDAQ chances are 58%.

DJIA                     1.09 percent

NASDAQ             2.46 percent

S&P500               1.60 percent

 DJIA AND S&p500 DOWN 6 DAYS – NASDAQ DOWN 5 DAYS !!

 DJIA AND S&P500 -DOWN 6 DAYS — NASDAQ DOWN 5 DAYS  !!

Today’s close -the NASDAQ down for the fifth successive day while the DJIA and the S&P500 in the red for the six day in the row- has not occurred since April 1984. Indeed, the record shows only one other day, in 1975, with this pattern since the beginning of 1950!

Note that prices continued their fall in both cases after posting this pattern, though these two days are far apart and with differing circumstances.

Our conclusion is that negative runs that last for five and six days signal further and substantial declines in the immediate future. But that prices recover soon thereafter, and moreover, that subsequent gains more than make up these deep earlier losses.

That’s what happened in these two earlier repeats of the DJIA and the S&P500 down for six consecutive days while the NASDAQ closed down for five days in a row. Yet the initial circumstances differ substantially. In 1975, the decline was continuous, lasted just 38 days but amounted to a 14.1 percent loss. In 1984, prices moved higher at first, the decline took 75 days but amounted to only minus 5.0 percent.

This projection, as any based on just a two time history, requires cautious consideration. Yet because these repeats, so far apart, result in identical price patterns, actually strengthens the conclusion.

May 17, 2012     NASDAQ Posts 4th Loss – 5th Drop for  DJIA

A first – since the beginning of 2000, although five closes with all hthree indices posted five successive declines. That’s why we focus on the five minus series.

All but one came during recent major declines; and prices fell again for all but one on the following day.

Surely it would be a record setting close if these averages dropped for a sixth successive day.

Consider the two ways of analizing these closes: 1. Only once did this pattern happen when prices were rising but 2. since prices rarely declined further, it could very well signal an end to this decline.