Stocks: An Ugly Day, and Not a Pretty July So Far

By: Douglas R. Gillespie | Sun, Jul 18, 2004
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I plan on publishing a midyear economic and market update sometime next week. In advance, here are a few comments on the recent behavior of the stock market.

Friday marked another day when what was hyped by Wall Street as containing "constructive" news -- good IBM earnings and tame June consumer prices -- translated into a session in which strong gains early on could not hold. The DJIA saw a 75-point advance turn into a 23-point loss. Putting in a much worse performance was the NASDAQ 100. Its early 10-point, 0.7% gain, became a 24-point, 1.7% loss by the close.

Put somewhat euphemistically, July has been "disappointing" for the bulls. And last week's expiration worked no magic, nor did Wall Street's attempts at promoting "better-than-expected" earnings, inflation data, etc., etc.

For July to date, my seven-measure equity-market tracking group is down an average 4.6%, with losses running in a range of 2.2% for the NYSE Composite, to a much larger 8.2% for the NASDAQ 100, the latter reflecting the recent bloodletting in the tech sector.

And this not-so-good July showing has now pushed all but one of the tracking group's seven components into the red for the year. The group is down 1.7%, on average, for 2004 to date, with returns running in a range of +0.2% for the NYSE Composite, to minus 5.2% for the NASDAQ 100. The balance of the group's year-to-date returns are: Russell 2000, -0.3%; Wilshire 5000, -0.6%; S&P 500, -1.0%; Value Line, -1.7%, and DJIA, -3.0%.

Not long ago, I reaffirmed my opinion that July was likely to be a "problem" month. In addition, I opined the likelihood of serious breaches of respective 200-day moving averages -- perhaps double-digit serious. At the time, the starting points were higher, but the following table breaks out what 5% and 10% moving-average violations would entail for the DJIA, NASDAQ Composite and S&P 500, measured from Friday's closing prices. As of Friday, each proxy stood below its 200-day moving average.

Measure 07/16
MA Violation/
Resulting Price
% Decl/Gain From
07/16 Close At
Violation Of:
0% 5% 10% 0% 5% 10%
DJIA 10140 10233 9721 9210 +0.9 -4.1 -9.2
NAZ Comp. 1883 1987 1888 1788 +5.5 +0.3 -5.0
S&P 500 1101 1107 1052 996 +0.5 -4.5 -9.5

I have plenty of ideas why this is happening and happening now, many of which have been discussed in past research and forecasts. I will reexamine this in next week's review/update research missive.


Douglas R. Gillespie

Author: Douglas R. Gillespie

Douglas R. Gillespie, Sr.
Gillespie Research Associates
165 Sheridan Avenue
HO-HO-KUS, NJ 07423

Doug Gillespie oversees his own financial-market and economic consulting firm, Gillespie Research Associates. For a complimentary sample of Dougs material, e-mail him at

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