Though the NASDAQ and the S&P500 advanced for the fourth session in a row, these gains of .03 and .01 percent are too small to allow reliable identification of future market direction. Yet since such minor changes dominate recent closes, it becomes necessary to focus on their history.
Today’s analysis investigates small daily changes in the range of minus to plus .1 percent, with the goal of finding their placement in the daily up and down movements of the DJIA, the NASDAQ, and the S&P500.
The results, summarized in our graph, indicate that these small up, as well as, down changes occur with substantially greater frequency during bull markets than when the price trend is down.
These small change days amount to about six percent of the bear market closes; but in good times, when prices are heading up, they are near double that, ranging between 8 and 12 percent of all trading days.
This bull market advantage holds also for the following day, with the frequency of next day gains outnumbering those in bear markets.
These findings are counterintuitive; the comfort coming from large daily gains is immediate, yet it is these seemingly small fractional days that characterize bull markets.
DJIA -.10 percent
NASDAQ .03 percent
S&P500 .01 percent
