Taking Stock --- Week of 9/28 to 10/02, 2020

Monday, September 28, 2020

Green Arrow Up

DJI30 index at the close   —-   27,584.06   +410.10 (+1.51%)

The Index opened at 27362, up 188 points, and within 5 minutes reached 27632, up 458.  There was a slow climb to the hi of 27723, up 549 before 1:00, then it was mostly sideways for the next 2 hours.   The lo to hi span was 360 points.

Last week I cited 27500 as a benchmark, stating that a continuous rise above that level could cast doubt on the idea that the main thrust is down.  That level was breached, but not in a convincing manner.  Today’s hi, 27723, is 12 points short of a .618 retracement of the loss from the 9/16 hi to the 9/21 lo.  So nothing has happened - yet - to refute the idea of a downward impulse.

At the hi, the Index did pop out of the trading channel on the chart I drew last week - but, again, only by a little.  There’s no room there for a sideways move, so I expect tomorrow’s action will either validate the channel or refute it.

Closings -

9/28/18 - 26458

1/02/20 - 28869

8/28/20 - 28654

9/29/20 - 27584

NYSE Internals -

A/D = 2585 = 5.45

A/D Vol = 4.67

New Hi/Lo = 49/10

Tuesday, 9/29/20

Reddish Arrow slightly down

DJI30 Index at the close   —-   27,452.66   -131.40 (-0.48%)

The index opened at 27560, off 24 points.  It gyrated a bit, then hit a hi of 27606, 22 points into the green, before 10:00.  It then went into free fall, losing 268 points as it hit a low of 27338 just before noon.  It slowly climbed back up to 26566 at 2:30, before a jagged 114 point slide into the close, with a 78 point drop from a temporary hi in the last 11 minutes.  The lo to hi span was 266 points, the smallest since 8/28..

I could have called this a sideways move, since the change is less than 0.5%. Yesterday, I said, “There’s no room there for a sideways move, so I expect tomorrow’s action will either validate the channel or refute it.”  This was a clearly down day - but by such small margins: 117, 24 and 131 points, respectively for the hi, lo, and close - that these values really did just hug the channel border and avoid a strong sense of either refutation or validation.  So I’ll kick the can one day down the road and say we should expect something more conclusive tomorrow.  

Reading Elliott waves in real time is always a dicey proposition, and I’m not very good at it anyway, but what the hell - he goes.  As i see it now, the main thrust is down in a 5 wave pattern.

Wave 1 down from the 9/03 hi of 29299.35 to the 9/10 lo of 27447.08 was a drop of 1752.27 points.

Wave 2 [countercurrent] up ended at the 9/16 hi of 28364.77, covering 917.69 points  a retracement of 52.37%.

The next wave down ended at the 9/24 lo of 26537.01, covering1827.76 points.  This could conceivably be a complete wave 3 down, since it is larger than wave 1.  But this is only by a tiny margin, so I think it’s more likely that wave 3 is subdividing and this is subwave i of 3 down.  That would make yesterday’s hi of 27722.6 the top of subwave ii, with a retracement of 1185.59 points, or 64.87%  If this is the case, subwave iii of 3 will unfold over the next several days, and it will be scary.  A drop of over 2500 points will likely occur, bottoming in the low 25000s as a best case.  A 3000 point drop to the mid 23000s would not surprise me.  After that subwave iv up and subwave v down would follow.  And, even scarier, this could all be wave 1 down at a higher level of trend.

Don’t hold my feet to the fire on this - I’m just an amateur, and this a field where the experts remind us that these expectations are probabilistic not deterministic.  So I will be watching with anxious anticipation.  A strong turn upward will cause a complete re-evaluation.

All the indexes has similar contours today, though the NASDAQ was choppier.  They were all off a fraction of a percent.

Closings -

9/28/18 - 26458

1/02/20 - 28869

8/28/20 - 28654

9/29/20 - 27553

NYSE Internals -

A/D = 1114/1900 = 0.59

A/D Vol = 0.37  The total volume of 700.7 million share was the lowest since I started keeping track in on January 20.

New Hi/Lo = 56/11 = 5.09

Wednesday, September 30, 2020

Green Arrow Up

DJI30 Index at the close   —-   27,781.70   +329.04 (+1.20%)

The index opened at 27514, up 62 points, and quickly shot up to 27672.  It then climbed more slowly hitting the hi of 28026, up 574, before 2:30.  It then dropped rapidly, hitting 27592 an hour later.  From there, it was a choppy rise into the close.

I didn’t expect a significant increase, but this was clearly up day, and not by small margins — 421, 173 and 329 points for the hi, lo and close.  Fortunately, I weasel-worded my prediction yesterday, giving myself an out if the index went up. So, now there are two possibilities.  One is that the index is headed back up, possibly to new highs.  To get there requires sustained increases. The first hurdle is the 9/16 hi of 28365, less than 350 points above today’s hi.  After that it’s the 9/03 hi of 29199.  Beyond that, the sky’s the limit.

The other possibility is that a counter-current wave is still unraveling.  Today’s hi is a 81.5% retracement of the fall from the 9/16 hi. This is an extreme retracement but that seems to be the way things go in 2020.  The channel I drew was violated in a way that can’t be ignored.  I’ll see what to do about it in the next few days.

Closings -

9/30/18 - 26458

1/02/20 - 28869

8/28/20 - 28654

9/30/20 - 27782

NYSE Internals -

A/D = 160/1462 = 1.14

A/D Vol = 2.27

New Hi/lo = 70/14 = 5.00

Thursday, 10/1/20

Yellow Arrow Sideways.

DJI30 index at the close   —-   27,816.90   +35.20 (+0.13%)

The index opened at 27941, up 159 points, and rose to the day’s hi of 28041, up 260. Over the next hour if fell to 27760, 22 points in the red.  It hit 27950 about a half hour after that.  It was then mostly sideways until 2:00 when there was a sharp drop to 27669, the day’s lo, 112 points in the red at about 2:15.  It rose to 27860 at 3:00, then fell to 27720 at 3:45, followed by a rise of about 100 points into the close. The lo to hi span was 372 points.  

This is a clearly up day, with the hi, lo, and close up by 15, 152 and 35 points, respectively.  This is pretty anemic, though, and after the early morning surge, the Index fell the rest of the day - though not in monotonic manner.  This might have been the last gasp of the counter-current move.  But who knows?  

I’ve been expecting clarification most of this week, and it’s not presenting itself.  Broad brush, it’s been sideways since mid-September. The market finds its own way. 
 

Closings -

10/01/18 - 26651

01/02/20 - 28869

09/01/20 - 28646

10/01/20 - 27817

NYSE Internals -

A/D = 2079/958 = 2.17

A/D Vol = 1.32

New Hi/Lo = 78/22 = 3.55

Friday, 10/02/20

Red Arrow Down

DJI30 Index at the close   —-   27,682.81   -134.09 (-0.48%)

The index opened at 27536, off 280 points.  It immediately dropped to 27383, off 434. There was a sharp rebound that topped out at 27700.  If bounced around from that level down to 27500 until noon, then abruptly rose to 27820 at 12:20. It hit the hi of 27861, 45 points above water just before 1:30.  It dropped to 27700 a half hour later, rose to 27840 at 2:30, then slumped a bit, rose a bit and dropped over 120 points in the last half hour.

There was a lot of up and down, with a couple brief bobs into positive territory. The lo to hi span was 478 points.  This is a clearly down day, with the hi, lo and close off by 180, 286 and 134 points, respectively.  The lo was about 30 points above the 55 day EMA.

This could be the end of the counter-current move — maybe.  It will take a drop below 26500 to confirm that the major move is down.  It will take a gain above 29200 to confirm that the major move is up 

Today’s jobs report was positive, but weak.  Covid Karma has entered the White House.  Millions have used up their savings and might be facing eviction soon.  This is the economy collapsing at its base.  We do live in interesting times.

Closings -

10/02/18 - 26774

01/02/20 - 28869

09/02/20 - 29101

10/02/20 - 27683

NYSE Internals -

A/D = 1904/1117 = 1.70

A/D Vol = 1.81

New Hi/Lo = 67/37 = 1.89