Stock Market Small Daily Gain, Small Weekly Loss

By: PhilStockWorld

Courtesy of Doug Short: The big market news today was the Dow’s achievement of record closing high. My preferred market gauge, the S&P 500, closed with a modest 0.15% gain but was down 0.14% for the week. The index tracked its futures and opened lower, hitting its -0.46% intraday low in the opening minutes. It struggled into weak positive territory during the lunch hour, oscillated around yesterday’s close to finish with at its intraday high.

The yield on the 10-year note finished at 2.62%, up 1 bp from yesterday’s close and 2 bp above its 2014 low. The 10-year yield is well off its 3.04% close at the end of 2013.

Here is a snapshot the week.

Here’s a daily chart of S&P 500. We can see that today’s low was just fractionally above its 50-day moving average and that volume was weak.

Today’s fractional loss for the week sustained the 10-week pattern of alternating weekly gains and losses, and those weekly closes have exhibited a quite narrow range. Are we seeing a consolidation prior to a breakout? Or a move to the downside?

A Perspective on Drawdowns

The chart below uses the percent-off-high strategy for illustrating the drawdowns greater than 5% since the trough in 2009. It’s been a while since we’ve seen anything even vaguely reminiscent of a correction.

The S&P 500 is now up 1.63% for 2014 and 0.66% off its April 2nd record close.

Here is a longer perspective, starting with the all-time high prior to the Great Recession.

For a better sense of how these declines figure into a larger historical context, here’s a long-term view of secular bull and bear markets in the S&P Composite since 1871.

- Phil

www.philstockworld.com

Philip R. Davis is a founder of Phil's Stock World (www.philstockworld.com), a stock and options trading site that teaches the art of options trading to newcomers and devises advanced strategies for expert traders. Mr. Davis is a serial entrepreneur, having founded software company Accu-Title, a real estate title insurance software solution, and is also the President of the Delphi Consulting Corp., an M&A consulting firm that helps large and small companies obtain funding and close deals. He was also the founder of Accu-Search, a property data corporation that was sold to DataTrace in 2004 and Personality Plus, a precursor to eHarmony.com. Phil was a former editor of a UMass/Amherst humor magazine and it shows in his writing -- which is filled with colorful commentary along with very specific ideas on stock option purchases (Phil rarely holds actual stocks). Visit: Phil's Stock World (www.philstockworld.com)

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