Taking Stock - Week of November 16, 2020

Monday, November 16, 2020

Green Arrow Up

DJI30 index at the close   —-   29,950.44   +470.63 (+1.60%)

The index opened at 29672, up 193 points, and quickly rose to about 29900.  After a brief draw back to 29730, it reached 29940 for about a half hour around 11:30.  It dropped to 29760 after 1:30 and stayed below 29860 until 3:30.  There was a rise of about 100 points in the last 4 minute of trading.

This gives us new all time highs, both intra-day and closing, only 14 points apart.  This was a clearly up day, with the hi, lo and close higher by 405, 468, and 470 points respectively - all this in the midst of a raging pandemic that will have unpredictable long-lasting effects.  Evidently this is due to the favorable vaccine news.  As if we didn’t already have a quarter of a million deaths, and more than another 1000 every day.  It will take months to get the vaccine approved and distributed among the population - if everyone hits all home runs.  Now we hear that people on their death beds in red parts of the country, are denying the virus, even as it takes their lives.  Such is the power of a monstrous predisent* and Fox news, who care nothing about the people of this country, spreading lies and killing people every single day.  And now I see that 40% of the population is planning on their normal Thanksgiving family get-togethers.  How many grandparent and grandchildren will we lose due to this carelessness and denial?  How many parents and front line workers?

These new vaccines need to be stored and transported at extremely low temperatures — minus 70 to 100 degrees.  Is your local CVS equipped with that kind of capability?  

Today’s action puts the Index only a fraction above where it was before the February crash, so maybe it wouldn’t be unreasonable - if the Index hadn’t been historically over valued back then, and we weren’t in the Covid world now.  The index has increased to a level more than 2 standard deviations above its 233 day EMA three times since early 2018.  Each time there was a draw back, of increasing severity.  It has just crossed above the 1 standard deviation line. On Feb 12 the Std Dev was only 1085.  Now, because of the steep decline and recovery, it’s 2379.  You can decide how over-extended this is.

The P/E ratio of the SP500 is now 36.55.  It’s been higher than that only twice — in 2001-2 and 2008-9.  Those were good times, weren’t they!   Going back to 1880, it had never gone above 25 and change until the late 90’s.  Even in this century, when it’s been above 20 most of the time, this is only the 3rd time.  Good luck going forward!



Yeah, I’m seriously in downer territory here.  But this is all so depressing. Yet stock Indexes reach new highs.  Yay, hooray!

% Changes -
DJI30 - 1.60%
SP500 + 1.16%
NASDAQ = + 0.80%
Russell 2000 +2.37%

DJI30 Closings -
11/09/18 - 25413
01/02/20 - 28869
10/16/20 - 28606
11/12/20 - 29950

NYSE Internals -
A/D = 2562/536 = 4.78

A/D Vol = 6.22

New Hi/Lo = 198/3 = 66.22

Tuesday, November 17, 2020

Red Arrow Down

DJI30 Index at the close   —-   29,783.35   -167.09 (-0.56%)

The index opened at 29800, off 150 points.  At 10:00 it hit bottom at 29520, down 430.  It climbed steadily to 29840 at 12:15, stalled there for a couple hours, rose to 28872, the day’s hi and 78 points in the red, from 2:15 to 2:45. It then slid back to 29730 at 3:50, followed by a 53 point rise into the close.

This is a clearly down day, with the hi, lo and close off by 92, 152 and 167 points, respectively.  The lo to hi span was 352 points.  This slight decline does not end upward momentum, but it does appear to be slowing.  

We’ll see what happens next.



% Changes -

DJI30 - 0.56% 

SP500 -0.48%   

NASDAQ  -0.21%    

Russell 2000 +0.37%

DJI30 Closings -

11/16/18 - 25413

01/02/20 - 28869

10/16/20 - 28606

11/12/20 - 29783

NYSE Internals -

A/D = 1728/1337 = 1.29

A/D Vol = 1,41

New Hi/Lo = 136/1 = 136 [!]

Wednesday, November 18, 2020 

Red Arrow Down

DJI30 Index at the close   —-   29,438.42   -344.93 (-1.16%)

The Index opened at 29875, up 92 points, and quickly rose to about 29930.  After dropping to about 29840 before 10:30, it rose to 29930 again a half hour later.  From there it was a slow, steady drop to about 29640 at 2:30.  It hovered between that value and 29730 until 3:30, then fell a hard 200 points in the last half hour.

This is an outside day, with a higher hi by 58 points, while the lo and close were down by 87 and 345 points, respectively.  The span was 498 points.

For now, 30,000 looks like a hard barrier.  If stocks are going to go up 20% next year, as I see predicted, this barrier will have to be shattered.  To be fair, those predictions are about the SP500, but these Indexes almost always have similar motion over medium time frames.

With today’s loss, upward momentum appears to be used up.   Since 11/9, the Index has been more than 2 standard deviations above it’s 89 day EMA, except for one day on 11/12, when there was strong upward momentum.  With today’s close, it dropped below it by 37 points.  This hi level is extreme, and extremes usually lead to reversals.  The 89 day EMA is now at 27742.  There might be support in the 29000 to 29200 range.  Still, a near term drop over the next 2 to 4 weeks to the EMA, or even a couple thousand points lower, would not surprise me.

I’ve seen predictions of a draw back before the expected strong rise over the next year, and we might be approaching it.

Caveat lector.  These are expectations, not investment [nor speculation] advice.  Draw your own conclusions. 

% Changes -

DJI30  -1.16% 

SP500 -1.16%   

NASDAQ  -0.82%    

Russell 2000 -1.26%

DJI30 Closings -

11/16/18 - 25413

01/02/20 - 28869

10/16/20 - 28606

11/12/20 - 29438

NYSE Internals -

A/D = 1178/1879 = 0.63

A/D Vol = 0.53

New Hi/Lo = 162/3 = 54.0

Thursday, November 19, 2020

Yellow Arrow Sideways

DJI30 Index at the close   —-   29,483.23   +44.81 (+0.15%)

The Index opened at 29371, off 68 points, and quickly dropped to 29228, off 210.  It rose to a local hi of 29442 before 10:00.  It continued to zig zag in a narrowing range with a downward bias that bottomed at 29270.  After a 50 point bounce, it hit that level again before 1:00.  It then began climbing, hit 29400 at 2:30, then went nearly vertical, hitting the hi of 29525 after 2:30.  After a pull back to about 29420, there was an irregular rise of about 65 points into the close.

After a tug of war that narrowed all morning, the bulls took over in the afternoon. This is a mixed day, with the hi and lo lower by 406 and 205 points, respectively, and a marginal gain at the close.  The spread was 297 points.  So, despite this slight gain at the close, the extremes moved down considerably.  Momentum has topped, but has not turned down yet.  This assessment is based on closings, which have not changed much. Six of the last 8 closings have been within 103 points of 29500, which might be developing into the next resistance level.  

The Index gained almost 3500 points from the close on 10/30 to the hi on 11/16.  A gain like this - over 11% in 14 trading days - is hard to understand, or even rationalize.  [I guess that’s why “irrational exuberance” is an in-the-language phrase.] That upward momentum was powerful, and that is why it’s taken 9 days of going nowhere in a thousand point range to bring it to a close.  The impending reversal, should it come to pass, might also be dramatic.  The next several days will be interesting.

% Changes -

DJI30  +0.15% 

SP500 +0.39%   

NASDAQ  +0.87%    

Russell 2000 +0.84%

DJI30 Closings -

11/19/18 - 25017

01/02/20 - 28869

10/19/20 - 28195

11/12/20 - 29483

NYSE Internals -

A/D = 1948/1113 = 1.75

A/D Vol = 2.02

New Hi/Lo = 77/6 = 12.83

Friday, November 20, 2020

Red Arrow Down

DJI30 index at the close   —-   29,263.48   -219.75 (-0.75%)

The index opened at 29438, off 46 points.  It fell to 29310 before 10:30; rose to 29414 after 11:30; then fell again to 29300 before 1:00.  It rose to 29380 after 2:30, then hit the lo of 29231 at 3:15.  It rose to 29370 a half hour later, then made a hard fall of about 100 points in the last few minutes.  



All the choppiness aside, the trend all day was down.  The hi was 55 points lower, but the lo was higher by 3 points.   The span was 239 points, the smallest since 205 on 10/13.  Resistance seems to be firming at 29500, and support somewhere above 29000 looks pretty firm for now.  This is a very narrow range, and I don’t think the Index can stay within it for very long.



Upward momentum has stalled, but downward momentum has not yet taken hold.  So we’re in something like suspended animation while the bulls and bears try to wear each other out.  I doubt that this can continue very long.  Next week will probably be abbreviated due to the holiday, and possibly also informative.

The markets did not all conform today.  The DJI and SP500 had similar contours and results.  Except for the beginning and end, the NADAQ spent most of the day in the green but wound up negative.  The Russell 2000 spent most of the day in the red, but wound up just barely positive.

% Changes -

DJI30  -0.68% 

SP500 -0.75%   

NASDAQ  -0.42%    

Russell 2000 +0.07%

DJI30 Closings -

11/19/18 - 24466

01/02/20 - 28869

10/19/20 - 28195

11/12/20 - 29263

NYSE Internals -

A/D = 1407/1650 = 0.85

A/D Vol = 0.81

New Hi/Lo = 96/5 = 19.2