More Odd Things Happen

A few days ago, on June 30 2009 to be exact, I noticed the similarity of the DJIA and S&P 500 charts for the June 29 – well actually the graphs were identical. Look here for the original post.

Today I checked again. This time for the trading data of July 1, 2009. Here are the two original charts.
First the Dow Jones Industrial (DJI):

DJIA, July 1 2009

DJI, July 1 2009

Then the S&P 500 (SPX.I):

S&P 500, July 1 2009

SPX.I, July 1 2009

Viewed liked this the (almost) identity might not immediatly be apparent. However, the similarity is already visible.

So let’s scale the SPX.I chart and reduce the height to two thirds (67%) or the original height. The SPX.I then looks like this: 

S&P 500 July 1 2009

SPX.I, July 1 2009 (Note: height is scaled to 2/3)

and compare it to the unchanged DJI chart:

DJIA, July 1 2009

DJI, July 1 2009

They are (almost) identical. I say almost, because I wouldn’t exclude some minor differences on closer and more detailed inspection.

So, two out of three days (I didn’t check Monday, June 30 2009) the charts are identical. How is this possible and what would be the probability of this occuring?

The Dow Jones Industrial Average consists of 30 compenents whereas the S&P 500 consists of 500 components. Identity of the charts for any trading day would thus be an anomaly in a free and open market (exchange).  If it was not an anomaly, then the S&P 500 doesn’t make sense.
I would thus conclude from such charts as the above, that the information contained in the charts (i.e. the indices) is identical. The SPX.I index contains the same information as the DJI index for at least two out of three days.
It is almost as if the 470 components not in the DJI did not contribute any useful market information at all, as if they were not traded. That’s not true they were traded so there must be another explanation for this identity.

Now, if you think  that was odd, have a look at the SPY for the same day:

SPDR, July 1 2009

SPY, July 1 2009

Now we have three charts that look exactly the same. How likely is that? Must be in the 40-sigmas…

My guess is that such a similarity can only happen if algorithms that have been configured to reach a certain result are at work.
If that’s true then the result is completly predictable. At least for those who control the algorithms and others in the know.
They would then be making a whole lot of money right now.

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