Today’s NASDAQ close of 3919.92 is greater than yesterday’s 3919.79 by less than .001 percent. Nevertheless this change, and other days on which the NASDAQ advanced less than .01 percent, occurs far more often in bull markets than when prices are moving down. Accordingly, today’s action continues previous signals of further gains.
So far, more than six percent of all closes in the current bull market yielded NASDAQ gains smaller than .1 percent. In contrast, the previous, 2007/2009 bear market had just 1.4 percent positive changes this small. The diagram shows the frequency of these small closes over the last several price expansions and contractions.
Clearly, bear markets have far fewer small positive gains days; they range from 1.2 to 1.4 percent.
Further, our history shows that prices on the following day increased more often in good times than in falling markets.
One final comment – today’s pattern of three consecutive advances for the NASDAQ combined with a one day decline by the DJIA and the S&P500 is the first such combination in this century.
DJIA -.21 percent
NASDAQ .003 percent
S&P500 -.24 percent
