Monday, September 20, 2021
Red Arrow Down, Down, Down
DJI30 Index at the close --- 33,970.47 -614.41 (-1.78%)
SP500 Index --- 4,357.73 -75.26 (-1.70%)
NASDAQ Index --- 14,713.90 -330.06 (-2.19%)
Russell 2000 Index --- 2,182.20 -54.67 (-2.44%)
The DJI opened at 34469, gapping down by 160 points. It immediately fell to 33988, off 598. It then went sideways, between that level and 34215 until about noon, when it broke lower, hitting bottom, 33613, off 972, about 3:15. From there it rose over 300 points into the close. At the lo, it was only 87 points above the support level at 33526.
This is about as clearly a down day as you can ever imagine, with the hi lower by 320 points, and the lo lower by a stunning 907. The span was 847 points, the largest this year.
On Friday I said, ”But if subwave iii of 3 down is starting, the magnitude of the drop next week could be breath-taking.” And now, this certainly does look like that kind of 3rd wave action. I chose the DJI for that comment because the wave form was clearest in that Index. The recovery in the last hour might be all or part of subwave iv. When that is completed, we can expect a further drop in the next couple days.
All the indexes had similar contours. The SP500 also hit bottom around 3:15, just like the DJI. It was clearly down by 69 and 122 points.
The NASDAQ also hit its lo around 3:15, and finished with a larger percentage loss. It was clearly down by 39 and 48 points.
The Russell 2000 also hit its lo around 3:15. I had a clearly down day by 8 and 65 points.
This entire year has been spent in elevated territory never before visited by any of the indexes. Many pundits and analysts have been giving fundamental and technical reasons why the markets are due for some sort of a pull back. The Elliott wave analysis I'm aware of has been calling for a rather dramatic drop, followed by another surge to new highs over the next year or two. After that, there will either be a crash or doldrum lasting for several years. Whichever way that plays out, returns from equities will be then either flat or down during that time.
If you believe in reversion to mean, you'll realize that this is inevitable. After the crash of 1929, the DJI didn't recover to it's pre-crash high until 1954 – 25 long years of depression and war.
NYSE internals were extremely weak on very high volume
Daily % Changes -
DJI Closings -
9/17/19 - 26926
9/17/20 - 27657
8/20/21 - 35120
9/20/21 - 33970
NYSE Internals -
A/D = 532/2798 = 0.19
A/D Vol = 0.11