March 5, 2012 Prices Shaved as Week Begins
Declines continued for the second session in a row, providing a pattern of two declines following last Thursdays gains. While not a rare combination, nevertheless found on just 71 other trading days since the beginning of 2000. Yet todays losses are far smaller than those in the past. The median S&P500s decline is -.89 percent, more than double its -.39 percent decline today. Similarly, the DJIA median change of -.87 percent dwarfs todays -.11 percent decline. Further, while the NASDAQ dropped -.86 percent, its median loss for this pattern is 1.46 percent.
On the other hand, todays changes are far larger than those experienced recently; we underscore this difference since one of the comforting features of those earlier days is their littleness. History reveals that small daily changes occur more often when the trend of prices is up.
The diagram locates all of these 71 days, with green dots representing gains on the following day, and red showing further declines for the next day. On average, gains tend to dominate bear markets; they are less frequent when prices are trending up.
DJIA - .11 percent
NASDAQ - .86 percent
S&P500 - .39 percent
