Whereas yesterday’s analysis, based on this expansion’s extraordinarily length, yielded a pessimistic outlook, today’s post is more positive. It considers the size of daily changes of the S&P500. These are related inversely to rising prices. Today’s diagram shows the clear relationship between the size, as well as the variance, of daily S&P500 changes and the trend of closing prices.
Note the rising spread of these daily price changes at the end of the 2007-2009 bear market. Similar increases in the variance of daily price changes occur as the bull market turns into a bear market at the end of 2000. This spreading out happens again at the 2007 top.
An analogous surge in the range of daily S&P500 price changes can be seen when prices dipped twice, temporarily, earlier during the current bull market.
DJIA -.25 percent
NASDAQ -.50 percent
S&P500 -.39 percent
