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New highs deserve attention, yet bear in mind that the DJIA continues to lag behind the market. In fact, its close of 16,580.84 is just pennies above its previous peak on January 3. Then it closed at 253.22 percent of the 2009 bottom, while today new high achieved 253.26 percent of that low.

Yet consider two adverse facts that should tamper any celebrations. First, the DJIA has, and continues, to lag behind the NASDAQ and S&P500. As our diagram clearly shows, these two meters have outperformed the DJIA during this entire recovery. Today’s NASDAQ close is 324 percent of the March 2009 low while the S&P500 stands at 278 percent.

Further, with the NASDAQ close at 344 percent of its low on March 5, as well as the S&P500 close at 279 percent of that low, both indices now stand below their best performance this year.

The news from the Fed provides a further negative slant; its announcement today that it will reduce its monthly bond purchases by another $10 billion, is bound to have a negative impact on asset values.

DJIA .27 percent
NASDAQ .27 percent
S&P500 .30 percent

The DJIA and the S&P500 closed higher for the second day in a row while the NASDAQ closed up after declining the previous day, scoring a rare pattern seen on just 38 of the last 4,605 days. The diagram locates these events over the last five price cycles since 1996.

In actuality, these days occurred at a near equal rate during bull markets and while prices were heading down. Yet they have a distinguishing characteristic that is tied to the price trends: the median change of the S&P500 is positive in good times and negative when prices are heading down.

There is a further, yet coincident, fact: today’s changes for the DJIA, the NASDAQ, and the S&P500 are just about the same as the current upswing’s median changes since the beginning of this expansion in March 2009.

Another fact, today’s DJIA percentage gain is identical to yesterday’s rate. This is a unique coincidence – it has never happened before.

As for tomorrow, gains outnumbered losses during bull markets but prices declined more often in bear markets.

DJIA .53 percent
NASDAQ .72 percent
S&P500 .48 percent

Today’s diagram reveals the close relationship of the S&P500 and the Ten Year Treasury Note. Of course, these two separate wealth mediums should be highly correlated, but their prices are the inverse of each other. Yet their recent closes are succinctly parallel.

However, more important, is the near stability of these two prices. Could it be that the financial world’s caution hesitates to commit its portfolio until it becomes more familiar with the policies and initiatives of the new Federal Reserve Chairperson?

Similarly, could Janet Yellen be observing similar caution –and not implement new policy measures – until the market absorbs the possible impacts of the new Fed leadership?

DJIA .53 percent
NASDAQ -.03 percent
S&P500 .32 percent

Prices remained at a near standstill. The DJIA added $.01, the S&P500 gained .17 percent while the NASDAQ increased by .52 percent. Thus we focus today on the history of such small changes, concentrating on the S&P500’s daily gains less than .2 percent combined with NASDAQ advances in the .5 to .6 percent range.

Our diagram shows 22 such days over the 4,600 trading days of the last five price cycles. With all but four occurring during bull markets, prospects of still higher prices are promising. Nevertheless, the frequency of these days near the 2007 top demands precaution. In fact, one happened on August 22, 2007 – just 30 trading days before prices turned down. Further, the next incident was on November 5, some 19 days into the following bear market.

In view of these factors, note that February 11, some 50 trading days ago, closed with this same configuration.

Turning to tomorrow, consider that the record shows 22 advances, and only 7 declines, on the day following this pattern.

DJIA .00 percent
NASDAQ .52 percent
S&P500 .17 percent

Unsurprisingly the market backed off after six straight advances. Yet today’s DJIA and S&P500 losses were minimal with only the NASDAQ suffering a near one percent drop.

There have been just 38 such events since 1996, with all but two happening during bull markets. The diagram locates these, distinguishing between advances and declines on the following day. Unsurprisingly, declines outnumber gains more than two to one.

Remarkable, however, is the concentration of losses in the current expansion; since 2009, the following day experienced declines near three times as often advances.

DJIA -.08 percent
NASDAQ -.83 percent
S&P500 -.22 percent

The DJIA, now up for the second successive day, joins the market advance as the NASDAQ and S&P500 positive streak continues. It stands now at six positive days in a row, a combination seen just three other times since 1996. As discussed in yesterday’s analysis, these strings show no association with market tops.

Today’s diagram shows, though, one happening in June 2007, some 88 trading days before the market topped out on October 9.

Note the single occurrence in the current expansion last September – and that prices continued higher for another five days. Yet the following negative reaction soon faded, with prices thereafter continuing their move to higher levels.

DJIA .40 percent
NASDAQ .97 percent
S&P500 .41 percent

The fifth straight upticks of the NASDAQ and the S&P500, combined with a one-day loss of the DJIA, yields a combination seen only in bull markets. Today’s is the sixth since March 2009, since prices started the current expansion. There are just two others in this century, both during the previous bull market that ended in October 2007.
The diagram locating these days reveals that none of these happened near or close to the top of price expansions.

DJIA .25 percent
NASDAQ .64 percent
S&P500 .38 percent

Though the NASDAQ and the S&P500 extended their winning streak to four days, the DJIA lost ground, albeit just barely, closing down at minus .10 percent. Today’s diagram, plotting such closes over the past 5 price cycles, shows this pattern to be rare and also to be associated with rising prices.

One such incident occurred just one day after prices hit their 2000 top; another happened 90 days before the 2007 top. But in general, especially given this pattern’s infrequency, such closes fail to signal market turning points.

The last two incidents, in September and October of last year, resulted in higher prices on the following day. In general, however, the following days saw an even number of gains and losses.

DJIA -.10 percent
NASDAQ .23 percent
S&P500 .14 percent

Today’s focus considers the closing pattern for each of the last six sessions. They come in series of two: two gains, following two losses, after two gains. There are only six such combinations on record in the near 4,600 trading days since 1996. (We focus on these closes because they include all the sessions of the last five cycles of rising and falling prices.)

Considering the age of the current bull market, the longest since 1996, the sharp declines of recent days, and the fact that prices continue in the same trading range over the past weeks, none of these past events occurred near upper turning points.

Further, the single close anywhere near a major change in the market’s direction, happened near a bottom. It came 15 days after the current bull market started on March 9, 2009.

It should not be surprising that prices declined on four of the following days. Yet these losses were quite small. On the other hand, the advances on the other two days ranged from .89 percent to more than three percent.

DJIA .55 percent
NASDAQ .29 percent
S&P500 .67 percent

After two successive drops, prices moved higher and almost returned to last Thursday’s close. Yet they remain far below recent highs, returning to levels not seen since mid-February.

We have focused on the inordinate length of this growth trend. Now at 1,282 days, it exceeds the last bull market by more than 100 days; it is 223 days longer than the 1996/2000 expansion.

Yet, considering the total advance since 2009, this expansion seems moderate in comparison to the last two bull markets. Today’s diagram confirms this position. It shows the current S&P500 at 271 percent of its 2009 low; that is not significantly larger than the 255 percent gain achieved in 2000.

In fact, considering the average daily gain, today’s market has a lower rate than in 2000. Apportioning the current 271 percent advance by 1,282 trading days, yields .211 percent per day – that stands far lower than the .241 daily advance achieved between 1996 and 2000.

DJIA .91 percent
NASDAQ .57 percent
S&P500 .82 percent