How to graph the market year over year? for example Dow Jones Index

Question

I understand the notion of the market being memory-less and we should not use the history to make future decision. Also, I see in this site there are mentions of specific times in a year where the stock markets "tends" to go up or down.

I am searching for a graph tool that will allow me to map the dow jones or s&p indexes in a year over year fashion.

For example, instead of http://finance.google.com/ where it shows the S&P in a linear fashion all the way 10years back, where I can see year 2011 in red line from January to Dec, and year 2010 in a green line, etc.

Any ideas?

Answer 1

The graphing tools within Yahoo offer a decent level of adjustment. You can easily choose start and end years, and 2 or more symbols to compare.

I caution you. From Jan 1980 through Dec 2011, the S&P would have grown $1 to $29.02, (See Moneychimp) but, the index went up from 107.94 to 1257.60, growing a dollar to only $11.65. The index, and therefore the charts, do not include dividends. So long term analysis will yield false results if this isn't accounted for.

EDIT - From the type of question this is, I'd suggest you might be interested in a book titled "Stock Market Logic." If memory serves me, it offered up patterns like you suggest, seasonal, relations to Presidential cycle, etc. I don't judge these approaches, I just recall this book exists from seeing it about 20 years back.

Answer 2

Instead of using the actual index, use a mutual fund as a proxy for the index. Mutual funds will include dividend income, and usually report data on the value of a "hypothetical $10,000 investment" over the life of the fund.

If you take those dollar values and normalize them, you should get what you want.

There are so many different factors that feed into general trends that it will be difficult to draw conclusions from this sort of data. Things like news flow, earnings reporting periods, business cycles, geopolitical activity, etc all affect the various sectors of the economy differently.