Taking Stock - Week of October 26, 2020

 I've been posting the daily DJI30 updates from my FaceBook page at the end of the week for a few weeks now.  Starting today, I'll be putting them up each trading day [if I remember.]

I am neither a financial advisor, nor a stock analyst.  I'm an old man with an attitude, some curiosity and an internet connection.  Add NaCl to taste.

Monday, October 26, 2020

Bright Flashing Screaming Red Arrow Down

DJI30 index at the close   —-   27,685.38   -650.19 (-2.29%)

The Index opened at 28186, off 150 points, and that was only the beginning.  It immediately dropped to 28033, off 303.  Then the decline shifted from precipitous to a steep tumbling slide.  There was nothing resembling even a minor rebound until it hit the  low of 27317, off a cool 965 points at 1:30.  It rebounded almost 300 points to 27620, down a mere 716.  Support near 27530 was solid the rest of the day, and there was a rise of about 160 points in the last few minutes.

This is a clearly down day, and quite dramatically so. The hi, lo and close were off by 250, 780 and 650 points, respectively.  The index blasted through the 55 day EMA and round number resistance at 28000.  It slid through 27500, but didn’t maintain the lo. Last Thursday I mentioned support in the lo 27000’s, and that was in effect this afternoon. 

The day’s span was 816 points, the largest since 875 on 9/04. That was a Thursday, and I said this: ”On Wednesday it was up, up and away.  Now we have to wonder if this is the end, and where the bottom might be.”  It was the end, at least for that thrust.  And now I’m wondering again - or maybe still.

Pundits are blaming the double whammy of the CV-19 surge and lack of stimulus for today’s decline.  But these things are not shocks. They’ve been obvious for a least a couple weeks.  Ignore the pundits.  There is good news and bad news every day; and if the market reacts to them at all, it is in a way that is both trivial and ephemeral.

Anyone who reads these posts regularly [if such persons in fact exist - say hi in comments of you do] will not be surprised to find that I am not surprised by today’s plunge.  You know not the day nor the hour, but I was quite sure we were on the verge of some sort of a decline.  Upward momentum peaked in the first week of September, and momentum has been sideways since.

Sideways momentum also happened after the 6/08 high.  The ensuing lo was on 6/26, but momentum wasn’t clearly up again until the beginning of August.  After that was a very good month.  The August 3 close was 26664; the September 2 close was 29101.  That was a tidy gain of 2436 points [9.14%] for anyone who was able to capture it.

But for now, at least, the party is over.  I have no idea how long the decline will last nor how lo it will go.  Just a few months ago in March the Index bottomed at 18592.  The entire year of 2018 was a bust.  But memories are short, and irrational exuberance is greatest at the peak.  For asset appreciation, the time to buy is when gloom and doom are everywhere, and all the excesses have been wrung out of the market.  This is not that day.

There might be a partial recovery tomorrow, but I think that now there will be a downward thrust of some duration, and it’s going to be weeks to months before the Index exceeds 28500 again.

Closings -

10/26/18 - 24688

01/02/20 - 28869

09/25/20 - 27174

10/26/20 - 27685

NYSE internals -

A/D = 388/2697 = 0.14

A/D Vol = 0.10

New Hi/Lo = 14/45 0.31

Tuesday, October 27, 2020

Red Arrow Down

DJI30 Index at the Close   —-   27,463.19   -222.19 (-0.80%)

The Index opened at 27651, off 34 points.  It approached 27700 twice in the first 50 minutes, reaching a hi of 27008.  It reached a low of 27536 before 10:30, jumped up above 27625, then repeated that action two more time.  On the 4th try it hit a marginal new lo at 27462.  There was one more bounce to 27550 followed by the day’s lo of 27485 in the last few minutes, just 5 points below the close.  The span was 250 points, the lowest since 204 on 10/13.  The 10 day average is 385.

All this intra-day bouncing around is counter-current to the downward thrust.  I would not have been surprised by a positive outcome today, but all we got was a low 88 points above yesterday’s. Meanwhile, the hi was off 478 from yesterday’s, and only 22 above yesterday’s close. Momentum has clearly turned down.

The SP500 also zig-zagged today, centered around the null point and finished down 0.3%.  The RU2000 was down almost continuously from shortly after the opening, and finished down 0.9%.  But the NASDAQ was up all day and finished with a 0.64% gain. This is more market fragmentation.

Fasten your seat belt and put on your crash helmet.

Closings -

10/25/18 - 24985

01/01/20 - 28869

09/25/20 - 27174

10/27/20 - 27463

NYSE Internals -

A/D = 942/2086 = 0.45

A/D Vol = 0.34

new Hi/Lo = 31/34 = 0.912

Tuesday evening Update

I haven't been paying attention to the NASDAQ, but took a look at it this evening. I put an exponential best fit exponential curve through the data from the beginning of 2010 to now.

Mean reversion is real, but inexact. Typically the Index will run on one side of the best fit curve for a while, then cross and run on the other side. Occasionally, it will bounce off the curve and return to the same side.

So, despite mean reversion being real, for the Index to be at or near the curve is not typical, and overcorrection is the norm.

In the last two years the deviations have been extreme. At the 3/23/20 low, the Index had fallen about 22% under trend. At the 9/02/20 hi, the Index was above trend by about 18%. One could have gotten rich in about 6 months. Now it looks like the correction has already started. and momentum is downward. If the correction is as extreme as the current situation, the Index could go below 9000.

NASDAQ since 2010

NASDAQ in 2020

Wednesday, October 28, 2020

Flaming Red Arrow Down

DJI30 Index at the close   —-   26,519.95   -943.24 (-3.43%)

The Index opened at 27102, the day’s hi, off 361 points, and immediately plunged to 26880, off 583.  It hit a lo near 28600 before 11:00, bounced a bit, hit the low again at 11:30, and after rising to 26800 dropped to 26554 at 1:15.  At 3:30 it climbed slightly above 26750, then dropped a hard 210 points into the close, which landed only 23 points above the low.

This is the worst clearly down day in months, with the hi, lo and close off by the jaw dropping amounts of 606, 961 and 943, respectively.  In Elliott wave terms, it’s 3rd wave down territory, and I suspect it’s not over yet. 

I see this being blamed on the CV-19 surge, and no chance of stimulus in the near term.  As I’ve already stated, these things are very emphatically NOT new news.  Forget the news, forget the pundits, turn off TV - the market runs on emotion, and for now, it is negative.  The bottom is not yet in sight.

There could be round number support at 26500.  The Index spent most of the day bouncing up from 26600, plus or minus a few dozen points, before the plunge into the close. The 9/24 lo was 26537, just 17 points above today’s close; and there was a cluster of support around that level in July, before the August surge.

A counter-current move up tomorrow, even of several hundred points, would not surprise me, but it will be temporary, and  IMHO, the current move down is far from over.

Closings -

10/26/18 - 24668

01/02/20 - 28869

09/28/20 - 27584

10/28/20 - 26520

NYSE Internals -

A/D = 268/2834 = 0.09

A/D Vol = 0.09

New Hi/Lo = 14/98 = 0.14

Thursday, October 29, 2020

Green Arrow Up

DJI30 Index at the close   —-   26,659.11   +139.16 (+0.52%)

The Index opened at 26481, off 39 points; dropped to 26291, off 229; and rose to 26609, up 89, all in the first 33 minutes.  A hi of 26693, up 174 was reached at 10:40.  That value was exceeded after 1:30, on the way to the day’s hi of 26892, up 372, before 2:30.  From there, it was a slide of 233 points into the close.

The other Indexes were alsoup today, each by more than a percent, so the DJI is the laggard.

Despite the minor gain, the day’s hi and low were lower by 210 and 207 points, respectively.  The total span was 601 points, about the same as yesterday’s 605.  This is counter-current to the main thrust down.  So the downward thrust is not yet complete.  The 233 point slide at the end of the day reinforces this view.

Closings -

10/29/18 - 24443

01/02/20 - 28869

09/29/20 - 27453

10/29/20 - 26659

NYSE internals

A/D = 2016/1039 = 1.96

A/D Vol = 2.49

New Hi/Lo = 20/87 = 0.23

Friday, October 30, 2020

Red Arrow Down

DJI30 Index at the close   —-   26,501.60   -157.51 (-0.59%)

The Index opened at 26572, off 87 points, and immediately fell to 26529.  It reached 26429, off 230 before 10:00, and 26156, off 514 at 11:00. It bounced up to 26460.  The lo was challenged again after 2:30, but held.  From there trading had a slight upward slant, followed by a 295 point rise into the close in the last 20 minutes.

Despite the strong finish, this is clearly down day, with the hi, lo and close off by 253,147 and 158 points, respectively.  The Index seems to be drawn back to the 26500 level, which should now be resistance. It also seems that 26150 might be support, but that span is unrealistically thin. Meanwhile, the Index is in the range of values we saw from mid-June through mid-July.

Momentum is clearly down.  There is no reason to think the Index is near a bottom.

This wraps up the week and the month.

Monthly closing changes, Sept 30 to Oct 30.

DJI 30:  27782-26502 = -1280; -4.6%

NASDAQ: 11168-10912 = -256; -2.29%

S&P 500:  3363-3270 = -93; -2.77%

DJI30 Closings today -

10/30/2018 - 24875

01/02/2020 - 28869
09/30/2020 - 27782

10/30/2020 - 26502

NYSE Internals -

A/D = 1186/1862 = 0.64

A/D Vol = 0.75

New Hi/Lo = 19/64 = 0.297

Taking Stock - Week of October 19

Monday October 19, 2020

Red Arrow Down

DJI30 Index at the close   —-   28,195.42   -410.89 (-1.44%)

The Index opened at 28634, up 27 points, and immediately rose to 28711, up 106.  From there it tumbled down to 28474, off 132 points before 11:30.  It then ran sideways between 28500 and 28550 until 1:30, when it resumed falling, hitting a lo of 28143 at 3:00, and after a slight rise, again before 3:30. It rose to 28260, dropped to a marginal new lo at 28139, then rose 56 points into the close. 

This is a clearly down day, with the hi, lo and close down by 131, 431 and 411 points, respectively.  Today’s lo is only 42 points below last Thursday’s, so if the Index is plowing new ground here, it is by a thin margin.  

All the indexes were down, and all had similar contours.  I can’t say for sure that the rise from the March lo is complete, but that idea is worth thinking about.  The 10/12 hi of 28958 is now a benchmark that must be exceeded if the Index is to continue its climb.  But any further drop will suggest that a local top is in.  Possible support levels are at 28000, 27500 and the low 27000’s.  Alternatively, the index might just be moving in a long sideways crawl.  This has happened a couple times already in the last few months,

Closings -

10/19/18 - 25444

01/02/20 - 28869

09/19/20 - 27657

10/19/20 - 28195

NYSE Internals -

A/D = 827/2215 = 0.37

A/D Vol = 0.22

New Hi/Lo = 86/21 = 4.10

Tuesday, October 20, 2020

Yellow Arrow Sideways

DJI30 Index at the close   —-   28,308.79   +113.37 (+0.40%)

The Index opened at 28246, up 51 points. It reached a hi of 28458 before 10:30, then fell to 28285 at 11:00.  It climbed to 28400 just before noon, then shot up to 28503 a half hour later.  It went sideways for 45 minutes, then shot up again to 28575, the hi of the day, after 1:30.  From there it was a hard fall of 295 points, hitting a bottom at 28280 after 3:00.  It then chopped around, hitting a local hi at 28400, before sliding into the finish.

This is an inside day, with a higher lo and a lower hi.  The total span of 332 points

was less than yesterday’s 573.  Notably the day’s hi of 28575 was 137 points below yesterdays.  At the hi, there would have been a nice gain of 1.33%, but a late day decline erased most of it.

This is now over a week of basically sideways motion. Upward momentum has stagnated since the 9/16 hi.  One can never be too certain about these things, but I suspect the motion over the next few weeks will be down.

Closings -

10/19/18 - 25444

01/02/20 - 28869

09/18/20 - 27657

10/10/20 - 28309

NYSE Internals -

A/D = 2062/948 = 2.18

A/D Vol = 2.74

New Hi/Lo = 71/12 = 5.92

Wednesday, 10/21/20

Red Arrow Down

DJI30 Index at the close   —-   28,210.82   -97.97 (-0.35%)

The Index opened at 28271, off 38 points. It reached the day’s hi of 28451, up 142, shortly after 10:00. There was a hard fall to 28210 over the next hour. The next 2 hours were volatile, including a harp narrow spike up to 28400 before 12:30.  This was a complete rise and fall of 160 points in less than 20 minutes.  The day’s lo of 28197 occurred a half hour later.  The index then rose to 28360 around 3:00, followed by a choppy 149 point drop to the close.  

This is a clearly down day with the hi, lo and close lower by the rather small margins of 124, 46, and 98 points, respectively.  The day’s span was 254 points. 

Momentum is completely flat, and the trajectory of the daily highs is down 500 points in 7 trading days. This looks like preparation for - or perhaps the beginning of - a down turn, and I expect that’s where the market is heading in the next few weeks.

Closings -

10/19/18 - 25444

01/02/20 - 28869 

09/21/20 - 27148

10/21/20 - 28210 

NYSE Internals -

A/D = 1045/2003 = 0.52

A/D Vol = 0.61

New Hi/Lo = 62/26 = 2.39

Thursday, October 22, 2020

Greenish Arrow Up  —  a bit

DJI30 Index at the close   —-   28,363.66   +152.84 (+0.54%)

The index opened at 28197, off 13 points, and quickly jumped up to 28295, up 84. A rapid succession of sharp zigzags lower followed, leading to a sharp drop to the day’s low of 28040, off 171, before 11:00. An equally sharp rebound then occurred, topping at 28270, up 59, at 11:15.  After a slight side over the next hour there was a pretty steady climb to the day’s hi of 28421 before 2:30.  From there it zig-zagged into the close, 58 points lower.  The lo to hi spread was 381 points.  The 10 day average is 324.

Despite the increase at the close, the day’s hi and lo were lower by 29 and 156 points, respectively.   Highs have been lower for 4 consecutive days, and for 8 of the last 9.  The index isn’t moving very fast, but it is slumping.  Values are in the range where they were from 10/7 to 10/9, two weeks ago.

The surge of over 2000 points from late September has disguised the fact that upward momentum peaked in early September.  There hasn’t been a new local hi since the Index reached 29299 0n 9/03.  What we’ve seen in the last several days is a bipolar market, where the dueling forces are having a hard time finding a direction.  Hence the sharp intraday spikes and drops. Still, the bears are ekeing out incremental losses.

A trend is only a trend until it isn’t.  If there is any trend now, it is horizontal.  Nothing's happened to make me change my opinion that the next few weeks [possibly months] will be trending down.  Today we saw round number support at 28000.  For the move down to materialize, the Index will need to fall through support at 27500, the low 27000’s and 26500.

Closings -

10/22/18 - 25317

01/02/20 - 28869

09/22/20 - 27288

10/22/20 - 28040

NYSE Internals -

A/D = 2113/938 = 2.25

A/D Vol = 3.94

New Hi/Lo = 48/26 = 1.86

Friday, Oct. 23, 2020

Yellow Arrow Sideways

DJI30 Index at the close   —-   28,335.57   -28.09 (-0.10%)

The Index opened at 28410, up 46 points, and quickly rose to 28437, up 73.  It fell to 28306, off 58 points before 10:30.  It ran sideways for about an hour, then resumed falling, hitting the day’s lo of 28150 at 1:00.  From there is was a steady climb into the close.

The hi was about 15 points higher than yesterday’s, but 14 points under Wednesday’s.  The lo was 110 points above yesterday’s, but about 47 points under Wednesdays.  Today’s close is about 27 points above Tuesday’s. 

But each of these values is hundreds of points under last Friday’s.

Open - off 161

Hi - off 406

Lo - off 421

Close - 271

Momentum is either dead flat or slightly down, in both the DJI30 and SP500, and has been so, with only some slight wiggling, for a month and a half.  This is a market that cannot rise, but is working really hard not to fall.  But I think support is slowly eroding.

Closings -

10/23/18 - 25191

01/02/20 - 28869

09/23/20 - 26763

10/23/20 - 28336 

NYSE Internals -

A/D = 1906/1111 = 1.72

A/D Vol = 1.57

New Hi/Lo = 70/21 = 3.33