Taking Stock - Mid-September edition

 A week's worth of my market musings.

Monday 9/14, 2020

Green Arrow Up

DJI30 Index at the close   —-   27,993.33   +327.69 (+1.18%)

The index opened at 27719, up 53 points, and immediately jumped up to 27875.  It reached a hi of 28064 before 10:30.  After that it was mostly sideways. It reached the final hi of 28086 a 1:00 and again 10 minutes before the close, with a dip in-between to 27915 before 3:30. In the last 10 minutes there was a 46 point drop into the close.

The lo to hi spread was 367 points the smallest since 280 on 8/31.  The 10 day average is 554.  

The up-down-up contour of the last four days might be an a-b-c counter-trend move in a downward impulse.  If so, this could go on into a more complex pattern, or turn sharply down tomorrow.

The alternative possibility is a continuing increase from the 3/23 bottom, with the potential of a new all time high. The very strong NYSE Internals today are consistent with this view, but the last time this happened on 7/15 there was no follow through.

Closings -

9/14/18 - 26155

1/02/20 - 28869

8/14/20 - 27931

9/14/20 - 28018

NYSE Internals - Strongest since 7/15, an unremarkable day with a 379 point span and a 228 point gain, closing at 26870. 

A/D = 2448/591 = 4.14

A/D Vol = 5.59

New Hi/Lo = 60/12 = 5.0

Tuesday, Sept 15, 2020

Yellow Arrow Sideways

DJI30 Index at the close   —-   27,995.60   +2.27 (+0.01%)

The Index opened at 28140, up 121 points and within minutes shot up to 28231. This was to be the hi point as the Index slid lower for the rest of the day, with the slant steepening from 3:00 to 3:30, bottoming 62 points in the red.  From there it was climb of about 64 points into the close.

Despite the arrow, this is a clearly up day.  The close is up a mere 2 points, but the hi and lo are above yesterday’s values by 145 and 213 points, respectively.  The day’s span was 300 points.  

The S&P500 and Russell 2000 also were weak in the afternoon, but ended up on the positive side.  The NASDAQ gained 1.21%.

If the drop from the 9/03 hi was, in fact, wave 1 down at some level of trend, the .382 retracement would top out near 28117, and the .50 retracement near 28324.  Today’s hi, 28231, is within 11 points of splitting the difference. There’s no rule that says those levels have to be reached, but they are common expectations.  Today’s session-long slide adds some heft to the negative assessment, IMHO.  If the Index can’t get above 28324 some time soon, I’ll bet that the next substantial move will be down.

Closings

9/14/18 - 26155

1/02/20 - 28869

8/14/20 - 27760

9/15/20 - 28045

NYSE Internals -

A/D = 1653/1366 = 1.21

A/D Vol = 0.89

New Hi/Lo = 100/10 = 10.0

Wednesday 9/16/20

Green Arrow Up

DJI30 Index at the close   —-   28,032.38   +36.78 (+0.13%)

The Index opened at 28032, up 36 points.  There was a slight drop to the lo of 28022 in the first 15 minutes.  It climbed to 28300, give or take a few points before 11:30 and ran more or less horizontal until after 2:00.  It jumped up to 28365 at 2:40, then dropped hard to within a few points of the lo at 3:15. There was a bounce to 28175 followed by a 150 drop into the close, about 10 points above the lo, and within a point of the opening.

This is a clearly up day, with hi, lo and close up by 134, 90 and 37 points respectively, The day’s span was 343 points - a round trip that ended up right back where it started. The recoil from the day’s 2:40 hi was a hard bounce leading into a 333 point drop.  There might be a resistance band in the range of 28300 to 28400.

Yesterday I cited 28324, the .50 retracement of the drop from 9/03 as a benchmark.  Today’s hi exceeded that value by 41 points.  So now there are a few possibilities.

1. The main thrust is down, and today’s hi completed an A-B-C countercurrent move.  This implies a coming wave 3 down of 2500 points or more.
2. A more complex countercurrent wave could be developing over the next few days. An increase to about 28530, the .618 retirement level, would not negate this possibility.  This also implies a coming wave 3 down.
3. The major thrust is still up, and an new all time hi is a possibility.  An increase above 29200, the 9/03 hi would strongly favor this view.

So - for today we’re at a crossroad, and it’s not at all clear which way we are going to turn.  But my expectation is that markets are headed down.  The Russell 2000 was up 0.92% today; but the SP500 and NASDAQ were both down, by 0.46 and 1.25%, respectively.  Market fragmentation continues. Some of this could be a shift from a speculative interest in growth to a more cautious interest in value.  But that’s just a guess.

Closings -

9/14/18 - 26155

1/02/20 - 28869

8/14/20 - 27931

9/16/20 - 28032

NYSE internals -

A/D = 1852/1153 = 1.61

A/D Vol = 2.47

New Hi/Lo = 89/7 = 12.71

Thursday, 9/17/20

Red Arrow Down

DJI30 Index at the close   —-   27,901.98   -130.40 (-0.47%)

The index opened at 27834, off 198 points, and immediately dropped to 27648, off 384.  There was a steep climb to the day’s hi of 28057 shortly after 11:00. This was 35 points above yesterday’s close, but followed a few minutes later by an abrupt 337 point fall to 27720 before 12:30. Motion was sideways in the range of 27700 to 27875 until 3:30 when there was then a slight rise into the close.  

This is a clearly down day.  The close is off by only 130 points, but the hi and lo are off by 308 and 374, respectively.  The day’s span was 409 points.  The momentary late morning bob above yesterday’s close was the only flash of green in any of the 4 main indexes. Closings were all down: SP500, -0.84%; NASDAQ, -1.27%; Russell 2000, -0.62%

These aren’t huge losses.  But if the fragmentation resolves into coordinated downward motion, the results could be painful. 

The index is now in the same range that it occupied for several days in mid-August.  In the context of the most recent 7 trading days, motion is sideways.  This could be yet another extended horizontal move - the third in the climb from the 3/23 lo.  So the possibility of a continued increase remains.  But if this is an upward impulse, it is extremely halting and uncertain.   

Until there is a move either below 27000 or above 29000, things will remain ambivalent.  This is a disturbingly broad band of uncertainty.  But it’s 2020, and here we are.

Closings -

9/17/18 - 26062

1/02/20 - 28869

8/17/20 - 27845 

9/17/20 - 27902

NYSE Internals -

A/D = 1167/1836 =

A/D Vol = 0.73

New Hi/Lo = 46/11 = 4.18

Friday, 9/18

Red Arrow Down

DJI30 Index at the close   —-   27,657.42   -244.56 (-0.88%)

The Index opened at 27865, off 37 points, and in the next 20 minutes dropped to 27745, off 157.  By 10:30 it was back up to 27,947. It stayed mostly above 27800 and popped briefly above 27900 shortly before noon.  At that time I thought this might be another go nowhere day, but over the next hour and a half the Index dropped 300 points, hitting a lo 414 points underwater.

From there it rebounded to 27750 after 3:30, then dropped almost 100 points in the last few minutes, ending 169 points above the lo.  The lo to hi span was 459 points, the largest since 9/10.

This is the second clearly down day in a row.  The hi and low were under yesterday’s by 110 and 160 points, respectively. Today’s lo of 27488 of still above the lows of 27448 on 9/11, 27447 on 9/10, and 25765 on 9/08 - but only by a few dozen points.  Looking back into August, there are a couple other lows near 27500.  So there might be round number support near that level.

All the indexes were down today, after spending most of the day in the red.  Short term momentum has turned down.  

Today DJI30 volume was 703.9 million. Typical in the last two weeks has been in the low 400’s.  NYSE volume was almost 3.2 billion shares, triple yesterday’s, and over 3.75 times daily volume since the beginning of August.  I have no idea why.

Closings -

9/18/18 - 26406

1/02/20 - 28869

8/19/20 - 27693

9/19/20 - 27657

NYSE Internals -

A/D = 1039/1871 = 0.52

A/D Viol = 0.37

New Hi/Lo = 66/22 = 3.00