May 1, 2012 Prices Reverse Direction, Again
Using the same headline as yesterday to describe todays action fits quite well except that prices rebounded today, in contrast to Mondays declines. Considering the many changes in the direction of daily price movements, we focus on their frequency.
Our diagram of the S&P500 closing prices shows the number of direction changes per year for each of the past 13 years. They range from 72 in 2008 when prices fell from their 2007 peak- to 60 in 2009, when prices hit bottom and started their recovery.
Yet coincidence can not be ruled out to explain this contrast: the 2000/2003 decline, in contrast, does not follow a similar track.
We consider also the rate of price changes on those days when prices changed direction. These range from an average of .01 percent in 2011 to .16 percent in 2008. As before, we cannot ascribe these differences to the changes in price trends.
We emphasize again, we share these findings even though we have not found an analytical relationship between the frequency of price changes and the direction of future prices.
DJIA .50 percent
NASDAQ .13 percent
S&P500 .57 percent
