USMarketView

May 2, 2012            NASDAQ Up – DJIA and S&P500 Down Yield a Positive Outlook

With the NASDAQ gaining  .31 percent and closing higher for the second day in a row, while the DJIA and the S&P500 fell after yesterday’s gains, the market replayed  a pattern seen 36 other times in the past 13 years. The diagram locates these days, using a green symbol to indicate advances on the next day, and red circles to show declines on the following day.

In the past, this pattern occurred twice as often when prices were rising as when they were in decline.

Further, prices moved higher on the following day, also twice as often as they declined.

In sum, a cheerful outlook provided the future follows the same course as occurred in the past.

DJIA                       -.08 percent

NASDAQ                  .31 percent

S&P500                 - .25 percent

May 1, 2012                                        Prices Reverse Direction, Again

Using the same headline as yesterday to describe today’s action fits quite well – except that prices rebounded today, in contrast to Monday’s declines. Considering the many changes in the direction of daily price movements, we focus on their frequency.

Our diagram of the S&P500 closing prices shows the number of direction changes per year for each of the past 13 years. They range from 72 in 2008 –when prices fell from their 2007 peak- to 60 in 2009, when prices hit bottom and started their recovery.

Yet coincidence can not be ruled out to explain this contrast: the 2000/2003 decline, in contrast, does not follow a similar track.

We consider also the rate of price changes on those days when prices changed direction. These range from an average of .01 percent in 2011 to .16 percent in 2008. As before, we cannot ascribe these differences to the changes in price trends.

We emphasize again, we share these findings even though we have not found an analytical relationship between the frequency of price changes and the direction of future prices.

DJIA                       .50 percent

NASDAQ               .13 percent

S&P500                 .57 percent

April 30, 2012                                     Prices Reverse Direction 

Prices declined, ending the string of straight  advances ; the DJIA and the S&P500 declined after four successive advances, while the NASDAQ’s string ended at three straight gains. It was the 11^th change of direction this month.If these up-then-down sequences seem a bit much, they are. April recorded eleven  direction changes, compared to nine the previous month, while there were only eight in February and March.Yet the record for the 2000 to 2011 period shows 1,637 daily direction changes for the 3,093 trading days. We have not found a systematic relationship between the frequency of daily direction changes and the trend of prices.As for the next day, in the past prices moved higher. 

DJIA                       -.11 percentNASDAQ              -.74 percentS&P500               -.39 percent