June 11, 2008
The NASDAQ lost more than two percent, whereas the other two indices dropped almost -1.7 percent. This was the second large decline hitting stocks over the past four days. And the two days in between offered no chance of recovery with their fractional moves on Monday and Tuesday.
NASDAQs negative close is now its fourth decline over the past four trading days. Consider the number of such four in a row down days have been posted by this index since 1995. This date marks the start of a large appreciation in the NASDAQ, lasting till March 2000. While this may have been the result of the .com boom, nevertheless there have been two major peaks and one significant trough in the past thirteen years. (See the Figure below.)
Concentrating on the number of closes with fou-in-a-row- down-days and relating these to the overall up or down trend of the NASDAQ, a noteworthy pattern appears. As shown in the table below, the percentages are related to the direction of the index.
A rising NASDAQ trend has 2.48 percent and 2.28 percent. four-in-a-row-down-days, while there were 3.91 of these when the index fell between 2000 and 2002.
Looking at the current period, we see that since the last crest, in October 2007, the number of four-in-a-row-down-days amount to 2.65 percent of the total. A ratio that is less than registered in the 2000/2002 downturn, yet larger than in the two upturns.
DJIA -1.67 percent
NASDAQ -2.24 percent
S&P500 -1.69 percent