USMarketView

June 28, 2012                       Another Decline

Today’s losses follow two days of moderate advances. At the close, the DJIA and the S&P500 were off by about -.20 percent, declines ranking at about 1,200 out of the more than 3,100 trading days in this century. The NASDAQ, however, posted its 766^th deepest loss.

Today’s pattern -a loss after two straight gains that came after a decline- occurred on 32 previous sessions since January 2000. These are shown on the graph, with the green dots indicating gains on the following day. Losses are in red.

While the following day is divided almost equally between gains and losses, the 2003/2007 bull market experienced almost twice as many advances as declines. Thus, if the current trend is for rising prices, tomorrow’s close will be higher.

DJIA                               -.20 percent

NASDAQ                       -.90 percent

S&P500                         -.21 percent

June 22, 2012 More Up and Down

The repeated ups and downs of security prices continues, with today’s gains following Thursday’s declines. Yet only 18 other closes -since 2000- exist with this pattern: the three indices rising after two successive declines by the DJIA and the S&P500, whereas the NASDAQ had only one down day.

The repeats of this pattern have a strange and inconsistent history. They range from just five days to 320 days, with the previous such close 395 trading days ago on November 2010. Further, four others came in intervals longer than 300 days.

Our analysis, so far, fails to find a relationship between the frequency of these repeats and the direction of price changes, as well as the size of the following gains and losses.

Further, the day after has as many declines as gains, with the exception of the current upturn since March 2009. Today’s gain is the first, coming after three successive losses.

DJIA                               .53 percent

NASDAQ                      1.17 percent

S&P500                          .72 percent

June 21, 2012                  Third Repeat since Early May

Today’s pattern -the DJIA and the S&P500 down for the second straight day while the NASDAQ fell after yesterday’s advance- happened twice before, on May 4 and May 15. This pairing is quite unusual given that only 29 other such closes occurred during the past 13 years.

The diagram locates these earlier days, using green triangles to show advances on the following day; the red circles indicate further losses. Overall, gains outnumber losses two to one; with the last two May occurrences declining the next day.

We point out several items of interest. Rising markets have a larger proportion of these closes, while price changes are larger when prices are falling.

Nevertheless, not much evidence exists to allow a needed projection, given the sequence of recent ups and downs, showing the direction of prices in the near future.

DJIA                   -1.96 percent

NASDAQ           -2.44 percent

S&P500             -2.23 percent

The NASDAQ moved higher for the fifth straight day, but only by .02 percent. Nevertheless, combined with one day declines by the DJIA and the S&P500, this resukts in a pattern seen just eight times in this century. Our diagram identifies these closes, and indicates with a green triangle those  next days on which prices moved higher. The red circles show declines on the following day.

While higher prices on the following day beat declines by a score of +5:-3, this margin is too narrow for a robust projection.

The fact that these eight days  occur equally during rising and falling price trends, adds another reason for concluding that this history fails to allow any proection of price changes tomorrow.

DJIA                        =.10 percent

NASDAQ                   .02 percent

S&P500                   -.17 percent

June 19, 2012                     NASDAQ, S&P500 Score Four Gains in a Row

Rising prices and four straight advances go hand in hand. While our diagram shows their occurrence also when prices are trending down, almost all happened during the 2003/2007 expansion and since the market’s bottom in March 2009.

Further, the conclusion that the bulls are in charge is buttressed by noting that today’s results include also the recent ups and downs of the DJIA. While the record shows only six such closes in the past 13 years, they happened also during these last two expansions.

Yet tomorrow’s outcome will likely be a decline, since in the past, only 47 following days moved higher; the balance- 56 days – declined.

DJIA                         .75 percent

NASDAQ                1.19 percent

S&P500                   .98 percent

June 18, 2012 DJIA Down – NASDAQ and S&P500 Up

The week opened with a rare pattern, a decline in the DJIA while the NASDAQ and the S&P500 posted their third straight gain. Today’s is the 23rd repeat since the beginning of this century, and the 50th since January 1950.

Our diagram shows these days; it reveals no particular pattern attributable to good or bad times. It does show, though, their frequency increasing steadily: from .4 percent of all days during the 2000/2003 decline to 1.0 percent since the March 2007 bottom.

It also shows more gains on the following day when prices are moving higher. Yet because the differences in frequency are quite small, we don’t see this feature having any predictive value.

DJIA                                     -.20 percent

NASDAQ                               .78 percent

S&P500                                 .14 percent

Fourth Direction Change in the Last Four Days

The ups and downs now extend to four straight days - only the 37th repeat in the more than 3,000 trading days in this century. Will tomorrow bring another reversal, with prices declining on the last trading day of the week?

In the past, prices on the following day  declined nearly twice as often as they increased. There were 23 declines but only 13 advances. The diagram locates these days, with the red circle indicating the losing days and the green triangle showing the positive closes.

However, other, more precise or definitive signals do not confirm this feature. For example, these days account for .94 percent of all closes during the 2000/2003 decline; they increase to 2.25 percent for the 2007/2009 decline. Similarly, the 2003/2007 expansion had 1.30 percent while the current recovery from the 2009 bottom has just  .7 percent, so far.

Yet that six of these 36 days took place before, during, and after the October 2007 peak forces significant consideration of the thesis that this market could be topping off.

DJIA            1.24 percent

NASDAQ       .63 percent

S&P500        1.08 percent

June 11, 2012                      Decline Follows Run-up

Finally Back! After Many Computer Glitches

Today’s pattern of decline after many increases is too rare to allow statistical insights of where the market has been and how future prices will develop. So our blog marks time for one more day before publishing comparisons of current market action with their history.

However, consider today’s closes: the DJIA fell -1.14 percent, the NASDAQ lost -1.70 percent while the S&P500 slid -1.26 percent. These averages declined this much on a single day only 625 times in the more than 3,100 trading days since the beginning of 2000.

We are glad that our computer problem has been resolved. It seems that our three computers suffereed the same infection, that it lasted for more than ten days, and that only a coincidental keyboard stroke resolved the issue instantaneously.

Can’t believe it — after days of chatting with help desks, computers still hang up.

Disappointing, to say the least.