USMarketView

Consider the diagram – it shows this year’s daily closes of the S&P500 and highlights today’s, and the nine other days, when losses exceeded 1.31 percent.  Note that three occurred when prices hit intermediate lows just before the market resumed its acceleration.  Two happened just before these temporary halts and price continued their declines after only three such days.

Some further facts deserve attention.  These sharp reversals come in pairs: April saw two, on the 15^th and the 17^th; the three in June happened on the 5^th, the 19^th and the 20^th; August had two, on the 15^th and the 27th.

Today’s is the 106^th such deep loss of this bull market; these account for some nine percent of the 1,175 days since the March 9, 2009 low.  Their median loss comes to -1.97 percent, about one and half times deeper than today’s decline of  -1.31 percent.

Finally, on the days following such sharp declines, the median price change turned out to be positive, though small, at plus .27 percent.

DJIA              -.97 percent

NASDAQ      -1.90 percent

 S&P500      -1.32 percent

The NASDAQ slipped  -.20 percent whereas the DJIA and the S&P500 ended with small gains.  This closing combination -the DJIA and S&P500, up one day; the NASDAQ down one day- is rare, occurring on only 20 days in the past 17 years.

Another oddity of this pattern is how these days appear in close proximity.  Our diagram shows two happening within 22 days of each other during the 2004 bull market.  Another sequence of four such closes last year, within a 12 day period.

Note also that one of these closes came just 59 days before the 2000 market top.

Today’s diagram reveals the significant strength of this expansion, relative to the two earlier bull markets of this century. The S&P500 currently stands just about 20 percent above their highest prices; further, at 1,174 days of expansion, it is 20 days longer than the 2003/2007 expansion, and 115 days older than the bull market that ended in 2000.

DJIA               .82 percent

NASDAQ      -.20 percent

 S&P500        .43 percent

Activity since October 28 -six days ago- leaves the NASDAQ and the S&P500 just about unchanged; while the DJIA came out ahead, the gain amounts to less than a half of one percent.  Today’s diagram showing these six-day runs for the S&P500 reveals this the seventh such repeat this year. 

It shows that substantial price regressions follow these declining levels of six-day changes.  Yet, so far this year, such declines were not only brief, but moreover prices returned to their previous rates of gain.  Nevertheless, given that the current expansion, now at 1,173 days since the last bottom, is already the longest of the last three bull market, the current drop deserves consideration.

Turning to today’s closing pattern –three successive up days for the NASDAQ, combined with single day losses for the DJIA and the S&P500- we note only 47 such combinations occurred over the more than 3,000 trading days since 1996. Looking at tomorrow, note that prices on the following day moved up as often as they declined.

DJIA               -.13 percent

NASDAQ          .08 percent

 S&P500         -.28 percent

For the second day in a row, prices moved higher but gains were small:  today’s S&P500 changed by only .36 percent, while Friday’s advance was a similar minor .29 percent.  By contrast, the median gain over the more than 1,100 closes of the current bull market amounts to .57 percent.

All the same, though, small advances are more typical when prices are moving higher; the median positive change of the S&P500 in bear markets is nearly double that of bull market gains.

Today’s diagram shows that closes this small occur  on only one of every five days – but this proportion rises to about twice that when prices are trending up.

This history allows the conclusion that the current market remains in a moving higher mode.

DJIA               .15 percent

NASDAQ         .37 percent

 S&P500        .36 percent

Despite the government shutdown, the nascent debate on the role of the Federal Reserve and even the introductory troubles of Obamacare, the stock market keeps moving higher.  The S&P500 added 4.12 percent last month, following September’s 3.35 percent. Thus, focusing on July’s 5.7 percent, and putting aside August’s mere .96 percent, prices continue their record advance. 

This strength may be surprising in face of the modest changes of the past few days, but our diagram reveals that such smaller changes dominate the last days of the past two months, as well as at the end of July.

Today’s diagram presents meaningful insights into the market’s profile; it presents the chronology of each day’s trading in 2013.  Among its many revelations, is the stability dominating July’s trading.  That month’s near six percent advance results from a steady flow of modest gains as well as suffering only six losing days. 

It becomes apparent also that August’s modest result comes from 13 negative days -the most of any month this year- many of which experienced significant declines.

DJIA               .45 percent

NASDAQ         .06 percent

 S&P500         .29 percent