USMarketView

May 15, 2012

Today’s closing pattern of three declines for the DJIA and the S&P500, and two straight losses for the NASDAQ is the 8^th repeat since the beginning of 2000. The diagram shows these days -with red for further losses on the following day, and green for increases. While they concentrate around the 2003 lower turning point, they do not display occurrences near a market top.

Yet that is the signal that would alert us to a forthcoming upper turning point. Therefore, these closes fail to provide an insight into the current front burner fear: is this expansion, of rising prices since early 2009, coming to an end?

DJIA                                           -.50 percent

NASDAQ                                   -.30 percent

S&P500                                     -.57 percent

May 14, 2012                                         Decline Continues

The DJIA , NASDAQ and the S&P500 losses extended deeper than one percent as the market dropped again. (The NASDAQ actually increased the day before, but by a mere .01 percent!)

Our diagram shows that the majority of the 29 previous closes with this pattern are distributed almost evenly between rising and falling markets. But that prices increased on the following day twice as often as they declined.

With so many of these closes occurring at, or near, both the upper and the lower turning points, they fail to provide a basis for projecting the future direction of the market. Yet this distribution does allow the not unsensible inference that prices are approaching a turning point – moreover since prices have been rising since early 2009, that the turning point will move prices down.

DJIA                              -.98 percent

NASDAQ                     -1.06 percent

S&P500                       -1.11 percent

May 11, 2012                      An Upswing Pattern

                                             THE DIAGRAM

May 11, 2012 An Upswing Pattern

With the NASDAQ up after three declines, and the DJIA as well as the S&P500 closing higher for the second day in a row, this close returned for the 24^th time since the beginning of 2000. Our diagram positions these closes over the past four down-then-up price cycles.

Note that the 15 of the past 23 repeats occurred when prices were moving higher during the 2003/2007 and the 2009/date upswings. Further, that another, further price increase happened on 10 of these following days.

Continuing this division between ‘good’ and ‘bad’ times,’ this pattern’s following day history rises from 13 gains:10 losses, overall, to 10:5 for the two upswings. It falls to 4 gains:5 losses for the two declines of 2000/2003 and 2007/2009.

We call this history an ‘upswing pattern’ since most of these days happened while prices were trending higher. Of course we must remember the usual disclaimer, that was the ‘certain’ past as we attempt to foresee the uncertain future. Nevertheless, this experience can support a projection of higher prices ahead.

DJIA                                  .64 percent

NASDAQ                           .32 percent

S&P500                             .36 percent

May 10, 2012                Finally, The  DJIA Moves Up – But Outlook Remains Dim

Finally, after six successive declines, the DJIA closed higher. Yet today’s pattern does not promise a clear path out of the woods. With the NASDAQ down for the third day, while the S&P and the DJIA turned higher, we have a repeat of pattern played for the 19^th time in this century. The diagram showing these days, uses red to indicate lower prices for tomorrow and green for advances.

It’s not just that the 13 declines outweigh, by more than a factor two, the 6 increases on the following day. Our calculations, not shown on the graph, indicate that the median gains for the following day come to less than one-half of the median losses. The NASDAQ, for example, shows a median loss of -2.12 percent but a median gain of only .85 percent.

DJIA                           .16 percent

NASDAQ                  -.04 percent

S&P500                     .25 percent

May 9, 2012                           DJIA Down Sixth Day

Losses continued as the DJIA fell for the sixth straight session while the NASDAQ and the S&P500 dropped for the second straight day. Only one other close –in 2002- has this same pattern. Then, the following day saw prices risinf for these three averages.

NASDAQ’s prices suffered the most since the market’s decline started in mid-March. Our diagram plots the daily proportion of their October 2007 highs for DJIA, NASDAQ and the S&P500. The NASDAQ’s loss is 7.8 percentage points, a total larger than the combined losses of the S&P500 -4.1 percent- and the DJIA -3.0 percent.

Yet the NASDAQ still stands 4.4 percent above its October 2007 high, whereas the DJIA remains at 91 percent of that top. Worse yet is the plight of the S&P500 – 13.5 percentage points below that October 2007 high.

Looking at the past, in 2002, prices increased on the following day.

DJIA                         -.75 percent

NASDAQ                  -.39 percent

S&P500                    -.67 percent

May 8, 2012                      DJIA Down Fifth Day – Almost a Never Before

Our diagram shows the 29 other closes in this century when the DJIA closed lower for five successive sessions. Further, with the fifteen red dots indicating a further decline for the following day, there is a near 50 percent chance that tomorrow’s close will bring a further loss.

More alarming, is the many days clustering at turning points, when the trend of price changes shifts from up to down.

Further, no single day since the beginning of 2000, shares today’s pattern of five successive declines for the DJIA, two losses in a row for the NASDAQ and a decrease for the S&P500.

DJIA                                  -.59 percent

NASDAQ                          -.39 percent

S&P500                            -.43 percent

May 7, 2012                                      A Mixed Day

The DJIA, off for the fourth day in a row, lost -.23 percent, while the NASDAQ and the S&P500 gained 05 and .04 percent. These changes are far from robust or significant in their relative size. The DJIA has near 1500 losing days since the beginning of 2000, with more than 1,100 deeper or more negative than today’s -.23 percent.

Similarly, the S&P500 and the NASDAQ have more than 1,5000 closes larger than today’s gains.

More significant than these size comparisons is where, or when, in the past these combinations occurred.

The diagram shows just one of these days happened during a period of rising prices; further, this took place at the bottom of price decline.

The other three came while prices were in decline from their 2000 top. While the market turned higher shortly after the last of these, prices declined substantially after the first two.

All together, if these data points lie in our future, they do not promise further appreciation.

DJIA                               -.23 percent

NASDAQ                         .05 percent

S&P500                          .04 percent

May 4, 2012                         Further Losses

The week closed with the DJIA and the S&P500 down for the third straight day while the NASDAQ fell for the second day in a row. It’s the 7^th repeat for this pattern since the beginning of 2000. While three of these combinations hit during the 2000/2003 decline, the other four came while prices were moving higher, in 2003/2007 and since March 2009.

May 3, 2012                       Another Down Day – with Positive History

The NADAQ’s  decline, joining the second drop in a row for the DJIA and the S&P500, is the 30^th repeat of this pattern. In the past, most of these days occurred while prices were trending higher. This combination happened just once during the decline of 2007/2009.

As for the following day, in the past, prices increased 23 times, falling on just 6 days.

DJIA                       -.08 percent

NASDAQ               .31 percent

S&P500              - .25 percent