February 16, 2010
You need to go all the way back to November 9 to find the S&P500 gaining more than todays 1.80 percent. Thats 66 trading days ago. The DJIA came in a close second, with a 1.68 percent improvement – also its largest move since last November. At 1.40 percent, the NASDAQ equaled its last such increase in January 19.
Focus should remain, however, on the continuing up-then-down configuration of prices. Except for the NASDAQ, now higher for the third consecutive session, the other two indices, now with six direction changes in as many days, have not been successful in leaving this see-saw behind.
Returning to the magnitude of todays closes, note that these results, or better, occurred a mere 25 times last year.
Yet increases in future values fails to follow from this favorable result. The diagram reveals that these advances, in the past ten years, tend to come in falling rather rising markets. The 2003/2007, the last bull phase, had just 1.5 percent of its trading days generating gains like today. Unfortunately, the number of these happenings is larger when the bears take over. They amounted to 7.2 percent and 11.0 percent of all closes when prices trended down.
In contrast, the rate since the last trough in March 2009 is 7.6 percent, closer to the proportion when prices are falling, than to the rate experienced during the last expansion.
DJIA 1.68 percent
NASDAQ 1.40 percent
S&P500 1.80 percent