Sales of light trucks discovered as key to forecasting the Dow. It may not be on topic, but I'm getting into anything that will give me a clue. This includes tee readings.<g>
NW
What makes the Dow hit pause?
Money Daily compared the days when the Dow closed unchanged, and
found some interesting patterns
By Janice Castro
OK, it was the boring midterm elections. That was one popular
explanation when the Dow closed unchanged Tuesday. The other: the
Dow was taking a breather after four days of strong gains. But how
can the Dow close precisely at the point of the previous day's
close, to one percentage point, and how often does that happen?
(Answer: once every two years in the 1990s, and only in even
years.)
Money Daily took a look at 12 days when the Dow has closed
unchanged in the last 20 years to see what, if anything, they had
in common.
One resounding fact emerged from our analysis: this never happened
once when Ronald Reagan was President.
Aside from that, these days of hesitation have occurred in the
depths of recession and at the height of post-war prosperity;
after sharp market run-ups and nerve-rattling declines, and more
than once just as traders were about to close on the bright side
of a precedent-shattering new threshold.
The Dow closed unchanged five times in 1978-1979 during the
inflation-scorched second half of Jimmy Carter's presidency , when
the CPI ranged from 8 to 12 percent and the industrials were
trading below 1,000 points. It happened four times during George
Bush's tenure even as the index passed the 3,000 mark, once on the
eve of the Gulf War, and three times so far under Bill Clinton as
the Dow has climbed past 8000.
Here's our Digital Notebook on Dow Days of Stasis during the past
decade:
March 14, 1989, unchanged at 2306.25:
Six months after the market crashed, and two months after George
Bush took office, unemployment was at a 14-year low . . . ten days
later the Exxon Valdez would strike a reef in Prince William
Sound, spilling 1.2 million barrels of oil into the pristine
coastal area and triggering a disastrous show of public relations
by the oil giant.
July 17, 1990, unchanged at 2999.8:
The Dow broke 3000 for the first time the previous day, but closed
a hair below, and stayed there . . . experts were debating whether
the Dow could remain in the 3000 range . . . Gorbachev and German
Chancellor Kohl reached agreement on reunifying East and West
Germany in the NATO alliance . . . economists worried that the US
was locked in recession as GNP growth slowed to just over 1
percent . . . the S&L rescue was underway, and Neil Bush, son of
the President, was embroiled in an S&L scandal . . . hoping to
edge out of recession, Chinese communists called for limited
market reforms. . . two weeks later, Saddam's troops would cross
the border into Kuwait, triggering the buildup to the Gulf War.
December 19, 1990, unchanged at 2626.70:
US troops were massing in the Gulf, one month before the war to
liberate Kuwait would begin . . . Soviet President Mikhail
Gorbachev was fighting for reforms in his crumbling nation, and
President Bush waived trade restrictions to free up $1 billion in
food credits for the hard-pressed Soviets as winter took hold.
March 12, 1992, unchanged at 3208.6:
Two days after Bill Clinton and George Bush swept the Super
Tuesday primaries, ending serious presidential hopes for Paul
Tsongas and Pat Buchanan, Jerry Brown was still banking on the
forthcoming Michigan primary . . . interest rates were low . . .
the long-bemoaned U.S. deficit with Japan was shrinking steadily .
. . Congress was reeling from the check-kiting scandal . . .
China's Politburo backed Deng's economic reforms . . . and experts
were debating whether the Dow could remain above 3000. Hello?
January 18, 1994, unchanged at 3870.30:
Los Angeles was recovering from the previous day's devastating
earthquake. . . After spending the first year of his presidency on
the health plan, President Clinton had hit the wall . . . South
Africa prepared for the end of apartheid, and the Mexican
government agreed to a ceasefire with the Mayan rebels . . . Bobby
Ray Inman withdrew as Clinton's nominee for Defense Secretary . .
. and everyone was talking about -- really -- the wonders of the
speedy new 486 chip.
December 2, 1996, unchanged at 6521.70:
After gaining more than 500 points in one month, the Dow bounced
back from steep losses on this day to hit the pause button . . .
several economic reports, including updates on manufacturing
activity, inflation and construction spending, showed the US
economy continued robust growth . . . Dow Corning proposed a $2
billion settlement in the breast implants case . . . and Chrysler
reported strong sales of light trucks.
November 3, 1998, unchanged at 8706.15:
Despite a sizzling presidential sex scandal (or more likely
because of it), Democrats were holding their own in the midterm
elections . . . the pause followed four days of strong gains that
made up much of the October losses as investors regained
confidence . . . traders were hearing reports all day that Senator
Alfonse D'Amato might finally be turned out of office . . . and
Chrysler reported an uptick in truck sales.
What does all this tell us about moments of stasis in the market?
1) The Dow can sustain trading levels at or above 3000.
2) There's something about Chrysler trucks.
3) The intervals between these pauses show accelerating growth: 5
pauses below 1,000, three between 2000 and 3000, two between 3000
and 4000, one between 6000 and 7000 and one above 8000.
4)The Jodie Foster index suggests that the next day of stasis will
come in the year 2000, with the Dow above 10,000.
With additional reporting by Kamau High, Elyssa Lee
and Tripp Reynolds
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