Odds Calculation: You might have noticed in this week’s Crain’s they mentioned my blog calculation from October 5, and had a professor come up with the odds of two days being closing at the same price to be one in 22,310,976. Looking at the professor’s calculation, I believe she was statistically trying to answer a different question than I posed. I was referring to the odds of two days closing at the same level. She seemed to attempt to answer the question “What are the odds that the market closes at 1099.23 on those two days?”, before the first day occurred.
There are a number of different ways to think about calculating the odds of the market closing at the same price on two different days, including removing the assumption that it is random. If you know the closing price on one day, the probable results of the close the next day is not random, it is likely to be more like a normal distribution, with the previous close being the most likely result. There are so many variables one could consider in trying to calculate these odds. For example, the further back in time you go, the less likely a repeat occurrence is.
In any event, it sounds like my blog entry got people thinking, which is good.
BZH: Beazer Homes came out today with positive news. That was not a typo, a homebuilder actually had positive news. Year-over-year home orders were up 33% and closings were up 23% for the quarter ended Sept 30. Its backlog of homes under contract was up 88% YoY.
Jobless Claims: Jobless claims came in slightly better than expected. For most of the year, as shown below, continuing jobless claims have been somewhat stable. The last two ticks have been downward, but the drop is not enough to say the job market is improving.
Continuing Jobless Claims (Four Years)
Market Today: The market ended slightly lower today. Financials were weak on worse than expected results from JP Morgan, tech was strong, and I noticed weakness in industrials.
Have a good day! Brent
