Small Changes at Close


April 30, 2009


In a repeat of the Wednesday action of last week, the DJIA and the S&P500 lost ground, whereas the NASDAQ moved up.  Yet these changes, just like last week, materialized only at the end of the day; earlier all three indices had been on the advance.  At the bell, the NASDAQ rose  .31 percent and the S&P500 lost  -.1 percent and the DJIA was off  -.22 percent. 

There have been 17 other closes with this pattern, when we limit the analysis to yesterday and today. The median changes on those days are  .18 percent for the NASDAQ,  -.11 percent for the S&P500 and  -.29 percent for the DJIA.  Obviously, today’s closes are in line with this record. 

In the following session, the data show that increases outnumbered declines in the past, by more than 2:1.  Assessing yesterday’s history based forecast for this session- losses more often than gains- there is a good fit.  With the actual changes not far from zero, however, the estimate was not very helpful.

Now that the market is recovering from it low point, the focus turns to when will prices turn around.  Looking at the 2000/2003 cycle s as a guide yields two possible scenarios.  The total decline from the October 2007 high is now 55.8 percent. At this point, the 2000/2003 cycle stood at 71.4 percent of its top.  The figure below shows this difference.

 2009-compared-to-2000-to-2003.GIF

So that perspective indicates the turn around is not far away.  Indeed, prices are already above recent lows.

On the other hand, considering that the duration of the previous cycle is far longer than our current position creates doubts that the upswing is in the offing.

However, these are just two alternatives, based on the path.  In fact, the actual outcome may have no relationship to the 2000/2003 cycle.

 

DJIA                  -.22 percent

NASDAQ           .31 percent

S&P500              -.10  percent

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