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Subject:  Thoughts on 11/25 Date:  11/24/2002  8:48 PM
Author:  bdixon619 Number:  27608 of 44633

Nasdaq: Friday the Naz finished with barely a 1 pt. gain. Monday there are three things to look at concerning the chance of it being a down day 1)overall probability of 52.42% and 2) chance that a down day follows a barely positive day like Friday, 53.57%. The third thing is the chance of extending the buying streak from 3 to 4 days, that chance is 51.61%. Looking at the 2-day probabilities helps define the scenario a bit more. These take into account what happened on Thursday and Friday, then project onto Monday. Chance Monday will be a negative day is 57.45%. Now for the positive case: it is highly unlikely we will have a positive day with less than a 1 pt. gain. That eliminates one whole class of chances. The odds of gaining more than Friday's point tomorrow are 30.36% (3 in 10) in the 1-day look and 27.66% (about 3 in 10) in the 2-day look. Finally, looking at the internal strength figures themselves which I calculate differently than TRIN I see that internal strength for tomorrow is projected to push the Nasdaq close to a positive finish, but only barely positive, slightly better than the 1 pt. close of Friday. So what this tells me is that tomorrow may very well be a day of waffling up and down with no strong trends expressed in either direction outside of what happens at the open. I just don't, at this time, think there is enough fear to turn the market down.

S&P: Friday was a negative close on the S&P 500 index. In the past 700 or so days this particular kind of negative close has occured almost 4 out of every 10 days. I think these figures are more proven than the Nasdaq figures because I have about 225 days more data. First the case for an up day: as I type this the S&P futures have risen almost 3.5 full points to 932 so the jam job may be on. Since odds for tomorrow for the positive case are less than 50%: 1) 1-day chance of 48.53% 2) 2-day chance of 49.30% and 3) overall odds of positive day 47.02% I want to focus a minute on the way the S&P can stay negative tomorrow. First it can lose less than Friday's 3.21 pts. Odds of that happening are 1 in 5 in the 1-day case and about 2.75 in 10 if you look at both Thursday and Friday. The chances of losing greater than roughly three points in the S&P increases to 3 in 10 in 1-day projections and a little better than 1 in 5 for a 2-day look. Overall odds of extending the losing streak to 2 days on the S&P are 54.01%.

This, so far, is as clear a look as I can provide. I do have some other probability calculations that might be of help but will have to study these some more before determining if they are worth it. The forecasting tool is something that will take a bit of work, so nothing from that for awhile.

Bruce
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