Where the NASDAQ Is Less Likely to Close At



Call up a one-year chart of the NASDAQ Composite index and you’ll notice a line of support and resistance around 4,900. Extend the chart to cover three years, and a second support/resistance line appears at approximately 4,600. Those support/resistance areas may not be not completely attributable to randomness.

The authors of a manuscript accepted by the North American Journal of Economics and Finance found evidence of barriers existing in the NASDAQ Composite (payment required). The index is less likely to close near a level ending “00” than at one further away. Rather, the theoretical most likely close is at a level ending in approximately “60.” Statistically, the NASDAQ has a higher chance of closing at, say, 4,560 then at 4,600.

No matter how the researchers tested the data, they came up with the same findings: the index is less likely to close within a 10-point range of a number ending between 95 and 04 (e.g., 4,595 to 4,604). Even rescaling the index values did not refute their findings. Future analysis might, but for the period of 1990 through 2012, the researchers give evidence to the existence of such “barriers.”

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1 Reply to “Where the NASDAQ Is Less Likely to Close At”

  1. Dear Mr. Rodblut …. I am a new AAII Lifemenmber and just read this article in today’s investor update. It is interesting, but the underlying thesis proposed in the paper submitted to the journal is not true.

    I looked at the historical data. There are 5797 trading days between Jan 1 1990 and Dec 31, 2012. If the last two digits of the daily close are evenly distributed, there are 11 integers between 94 and 5 and you would expect 11% of the days to end with closes between xx94 and xxx5. There are 648 days that do so. That is 11.2%. So the hypothesis that closes in this range are unlikely is simply not true.

    I can mail the excel sheer to you to look at this.

    Rajeev Vaidya


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