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After six straight declines, the NASDAQ and the S&P500 managed to edge higher; the DJIA scored its second positive day, but note that its earlier up tick amounted to just  .02 percent. Yet the outlook for tomorrow is uncertain, since in the past, the day following this pattern turned up just about as many times as it turned down.

This is the fifth repeat of this pattern in 2012; the last one on September 19 and the first happening in April. Prices moved higher on three of the next days, falling twice.

Our diagram locates these closes for the S&P500. It shows almost no consistency, with most of these days happening during the 2000/2003 bear market and since March 2009, during the current bull phase.

DJIA                                                                                      .72 percent

NASDAQ                                                                              .66 percent

S&P500                                                                                .81 percent

The S&P500 closed up for the first time in five days, but the gain amounted to just .02 percent. The DJIA fell again, for down day number 4, closing  -.14 percent down, while the NASDAQ declined for the fifth successive day, off a mere -.08 percent.

The resulting pattern –plus 1 for the S&P500, minus 4 for the DJIA and minus 5 for the NASDAQ- happened just once before, almost 20 years ago, on March 9, 1992. Obviously, that is too far away, and with too few data points to warrant any projections.

It is troublesome, furthermore, to see so many ‘atypical’ patterns closes, without an explanation at hand.

Yet a confidence factor based on recent history provides a stabilizing peg: the current recovery from the 2009 low parallels the last one, from 2003 to 2009. Certainly, it is not just keeping pace but the recent price trajectory is somewhat earlier and larger.

DJIA                                                 -.14  percent

NASDAQ                                          -.08 percent

S&P500                                             .02  percent

With the NASDAQ and the S&P500 posting their fourth straight loss, with the DJIA declining for the third successive day, we have to go all the way back to 1994 to find the last repeat of this pattern. To find a date closer to the present, we consider days with the DJIA also posting its fourth successive loss. That was just this last August, on the second.

Considering that graph, note that prices not only recovered but in fact continued their move to higher ground.

Yesterday’s projection, calling for a positive close today, obviously did not happen. Moreover, we stand on the sideline for tomorrow, with no other such patterns in this century.

DJIA                                                 -.95  percent

NASDAQ                                          -.43 percent

S&P500                                            -.62  percent

The NASDAQ and the S&P500 are now down for the third straight session while the DJIA slipped for the second day in a row. Though unwelcome, the decline is consistent with yesterday’s pattern, which in the past, showed a further decline more often than a positive turn around.

Higher prices, however, are on tap for today, as shown by today’s combination as illustrated in the graph. There is only decline –that happened earlier this year- offset by six advances.

Meanwhile, note that recent daily results continue the recent sequence of differing daily patterns, seen only rarely before. Further, that history reveals these uneven patterns go hand in hand with bearish pricing.

DJIA                                                 -.81  percent

NASDAQ                                         -1.52 percent

S&P500                                            -.99  percent

On Columbus Day the DJIA fell after Friday’s increase while the NASDAQ and the S&P500 fell for the second straight day, resulting in a pattern seen just 16 other days in this century. The diagram marking these shows three occurring during the 2000/2003 decline and that the other 13 happened while prices were trending higher.

Today’s market continues the recent flock of uneven closes. So far this year, there have been only 48 closes on which the DJIA, the NASDAQ and the S&P500 had identical up and down counts. In 2011, they totaled 108. Further, they came to 161 during the 2003 recovery year; and after the last bottom in 2009, there were 140 days on which these three averages posted identical up or down patterns.

While price trends and pattern counts are not completely paired, the continuation of this divergent pattern does not promise further gains.

On the following day, in the past, this pattern resulted in six increases and eight declines.

DJIA                                                  -.19 percent

NASDAQ                                           -.76 percent

S&P500                                             -.35 percent

The week closed with the DJIA moving higher for the third straight session while the NASDAQ and the S&P500 declined. It was the first reversal for the NASDAQ after three consecutive advances, and the first decline, after four increases in a row for the S&P500. The resulting pattern happened only 14 previous times in this century, and a total of 33 since 1950.

Further, note another oddity relevant for the future: eight of these last 14 closes occurred since the March 2009 bottom, with four clustered in 2011 and three so far since January.

Price increases dominate the following day, with the NASDAQ and the S&P500 moving higher 11 times, declining on only three next-day sessions. These gains are bunched also in the past three years.

We focus on a further, final point: today, as often in 2009, the frequency count of these three averages is different. So far, in the 191 trading days of 2012, the DJIA, the NASDAQ and the S&P500 have closed with the same pattern count just 48 times, or on about one day out of four.

This is far below the historical record of 50 percent, or one day out of two.

Our diagram plots these daily frequencies, using red to indicate different daily patterns, and green when these three averages close with identical patterns. Note how these red, different patterns, dominate the 2000/2003 bear market. We see this also, to a lesser extent, during the 2007/2009 decline.

Further, as our recent blogs have mentioned, recent closes also show this trend – yet despite this evidence, prices continue higher.

DJIA                                                    .26 percent

NASDAQ                                           -.42 percent

S&P500                                             -.03 percent

The S&P500 continued higher for the third session in a row, while the NASDAQ extended its positive streak to two and the DJIA turned positive after yesterday’s decline. This is only the fifth such close in this century, and the 13^th since 1950.

Our diagram shows two of these happenings during the 2000/2003 bear market with the other posted in this, since March 2009, recovery.

However, while advancing, these gains are quite moderate. The DJIA’s plus .09 percent ranks as the 169^th smallest, out of the 1,671 gains in this century. The NASDAQ gain of .49 percent is smaller than the other 1,124 positive changes since 2000. Similarly, there exist 1,095 larger S&P500 gains than today’s .36 percent.

Today is the first time since Friday that these thee averages moved in the same direction. While not rare, nevertheless, these indices have the same sign two days out of three. So far in this century 3,208 trading days, there have been 2,308 in the same direction, but only 1,573 positive while the other 735 days posted declines.

On the following day, the NASDAQ continued higher every time, whereas the DJIA and the S&P500 had only one gain as opposed to three losses.

DJIA                                                              .09 percent

NASDAQ                                                      .49 percent

S&P500                                                        .36 percent

Seen just eight other days in this century, the S&P500 moved higher for a second day in a row, the NASDAQ increased after falling the previous two days while the DJIA fell after yesterday’s increase. Moreover, this happened just four times in recent times, while you have to go back to the early 2000′s to find the other incidents.

On the following day, in the past, prices moved higher as often as they declined.

Let’s focus today on prices changes between Labor Day and year end. Today’s diagram shows these from 1950 on, with each of the presidential election years in blue.

Given that stock prices reflect the economic fundamentals and the growth of population and output, it is not surprising that the S&P500 declined in only twelve of the past years.

The presidential election years mirror this same fundamental, with prices falling in just three years, the last occurring in the 2008 cycle.

DJIA                                         -.24 percent

NASDAQ                                   .21 percent

S&P500                                     .09 percent

The NASDAQ falling again, is now down two in a row, a close repeated 369 times in this century. Moreover, on the following day, this index declined on the following days as often as it moved higher. At the same time, both the DJIA and the S&P500 went positive after falling the day before.

Lower prices on the following day occurred more often in a ratio of 21:14.

Given the presidential election this year, we take a look at price changes between Labor Day and election day. Prices declined by small fractions in 2000, 2004, and 2008. The S&P500 lost -.03 percent in the 252 trading days during the 2000 election; it fell -.04 percent in 2004, but lost -.16 percent in the 2008 contest.

DJIA                                      -.58 percent

NASDAQ                               -.09 percent

S&P500                                 -.27 percent