USMarketView

The market finally moved higher, following the DJIA’s five successive losses, and two straight down days for the NASDAQ and the NASDAQ. The bright outlook continues even though the Crimean vote and Putin’s acceptance leaves the political/international business climate in a precarious state.

Today’s diagram updates recent profiles comparing this bull market with the previous two, in 2000 and 2007. It uses the recent S&P500, March 7 high as the zero baseline of the current expansion.
These profiles look quite similar, with declines some twenty days before the previous two expansions.

DJIA 1.11 percent
NASDAQ .81 percent
S&P500 .96 percent

It was the fifth straight negative day for the DJIA. Only 41 other closes since 1996 have such a losing string. The diagram locates these days; it shows these quite evenly distributed over bull and bear markets. Though the frequency percentage is twice as great in declining markets, the numbers are minuscule. They run from .57 percent in the 1996/2000 expansion to 1.69 percent during the 2007/2009 decline.

Looking at Monday’s market, expect the DJIA to recover; in the past, the DJIA moved higher on 25 days and declined 17 times.

DJIA -.27 percent
NASDAQ -.35 percent
S&P500 -.28 percent

Prices dropped more than one percent – the steepest loss since January 13. Today’s diagram shows how the market came back, making a new high just two days later.

Today’s combination of four losses in a row for the DJIA while the NASDAQ and the S&P500 declined just one day, is a rare pattern, occurring just ten times in the 4,570 trading days since 1996.

Further, these days happened as often when prices were trending down as in bull markets.

On the following day, prices declined further six times, rising on only four days.

DJIA -1.41 percent
NASDAQ -1.46 percent
S&P500 -1.17 percent

Recent days are dominated by unusual daily changes. Today’s pattern, for example, consists of two declines in a row for the DJIA and the S&P500, while the NASDAQ closed down for the fourth straight day. There have been only seven other such days in the more than 4,000 trading days since 1996. Further, the record shows only 16 such days between 1950 and 1996.

Additionally, five of the last six trading days, have frequencies of less than one percent. The usual combinations of daily ups and downs for these three market indexes have frequencies as high as 15 to 20 percent.

Projections of future prices cannot be based on such limited data. We report these unusual frequencies without further comment; we believe though that this situation deserves attention.

DJIA -.41 percent
NASDAQ -.63 percent
S&P500 -.51 percent

Should it be a forewarning that another day passed with prices declining by just by a whisper? It seems logical to believe that when the interaction of buyers and sellers result in such minimal changes, they fail to have a belief in the market’s future. Obviously the Ukraine situation hangs over all markets – that was shown just a week ago when prices dropped on Monday and then on Tuesday recovered more than they lost the previous day.

The NASDAQ fell for the third straight session, while the S&P500 and the DJIA also lost ground. It was the first reversal for the S&P500 after four consecutive advances; the DJIA’s decline follows two up days.

Today’s diagram shows such days almost evenly distributed over bull and bear markets. Further, this history shows gains and losses happening at just about the same rate in up markets and down markets.
Prices on the following day maintained this even distribution over good times as well as when prices were trending lower.

DJIA -.21 percent
NASDAQ -.04 percent
S&P500 -.05 percent

Small changes characterize recent sessions – that is, with the exception of the Ukrainian situation drop on Monday and the sharp recovery on the following day. Today’s diagram reveals that the pace of change has slowed down since the beginning of February.

Yes, the market did finally continue higher and surpass its previous high of January 15. Yet at 1878.04, today’s close of the S&P stands less than two percent above that January high. Note also that prices remained below the January benchmark until February 25.

However, with the ongoing political turmoil and the threats of bilateral trade sanctions and boycotts, it is far from surprising that prices maintain their earlier levels.

DJIA .19 percent
NASDAQ -.37 percent
S&P500 .05 percent

Prices continue to move higher, reaching highs almost daily. Yet these gains are not across the board. The NASDAQ continues to lead these advances – as it has done for the past three years.
Consider the action since January 15, the day that these three averages had their first peak of the year. Today, the NASDAQ stands at 102.57 percent of that close, leading the S&P’s 101.6 percent, while the lagging DJIA, at 99.6 percent, has failed to regain its top.

Today’s diagram reveals the powerful performance of the NASDAQ all through this recovery. Its latest close brings it to more than triple the price at the 2009 bottom. The S&P500 trails far behind, its recovery brings it to just 277 percent of the March 2009 low. Meanwhile the DJIA, the once main indicator of the stock market, stands at just 251 percent.

DJIA .38 percent
NASDAQ -.13 percent
S&P500 .17 percent

In the past, today’s diverse results for each of the three major indicators cluster in bull markets. In fact, as the diagram shows, the 2007/2009 bear market does not show a single such close.
The analysis, and the diagram, considers the history of the distinctly different changes of the DJIA, down .22 percent, the NASDAQ, up .14 percent, and the S&P500, up .01 percent
.
With only one such day occurring in the two most recent bear markets, while the other 12 such days come up in each of the last expansions, it seems safe to consider this an affirmation of the continuation of the ongoing bull market.

Expect another up day tomorrow, since in the past the up days outnumbered losers 9:4.

DJIA -.22 percent
NASDAQ .14 percent
S&P500 .01 percent

Losses turned into gains in lockstep with the profile of the Russian President’s contradictory behavior. Today was good, once Putin’s explanation came out and his recall of troops from their ‘exercise.’

Such contrary behavior interferes with meaningful portfolio decisions. The market seems more emotional than rational when doom on Monday turns into euphoria on Tuesday.

So many reversals after posting new highs -as shown in today’s diagram- prevents meaningful analysis and projection of the market’s behavior.

DJIA 1.39 percent
NASDAQ 1.75 percent
S&P500 1.52 percent

Though security prices plunged worldwide, losses were moderate in the U. S. Losses were smaller than one percent for the three major market indicators. Nevertheless, the scare caused some to worry that this would be the end of the current record run.

While this could possibly happen, consider some previous catastrophic news that sent prices tumbling temporarily but did not halt the market’s trajectory.
President Eisenhower’s heart attack sent prices into a steep dive –some 6.5 percent. President Kennedy’s assassination resulted in a 2.8 percent drop.

Yet the market absorbed these disquieting events, and then resumed its earlier trajectory.

DJIA -.94 percent
NASDAQ -.72 percent
S&P500 -.74 percent