Taking Stock - Week of 12/28/20

Monday, December 28, 2020

Green Arrow Up

DJi30 index at the close   —-   30,403.97   +204.10 (+0.68%)

The Index opened at 30283, the lo for the day, up 83 points, and immediately shot up another hundred.  By 10:00 it reached 30416, and 30526, a new intra-day hi at 10:30.  It slid to 30380 at 1:30, rose back up to 30450 and hovered there from 2:15 for about an hour before sliding into the close.

The Santa Clause Rally happens in the last week of the old year into the first two trading days of the new. That extends from today until a week from tomorrow, and got off to a strong start.  A gain of 0.68% is quite modest, but we got a new intra-day hi of 30256, and a new closing hi of 30404.  This is a clearly up day, with the hi and lo up by 316 and 184 points, respectively.  The span was 242.

Ignoring the aberrant low on 12/21, the rising wedge is getting narrower.  This can’t go on much longer, since the lines will cross in just a few days. 

Today was a rather tepid session on the NYSE, with volume at about 3/4 of the last 6 week’s average, and decline volume greater than advance volume.  The S&P500 and NASDAQ were also up today, but the Russell 2000, crude oil, silver and gold all slipped.

My way of measuring momentum looks at time spans from 5 to 34 days.  Today’s increase did next to nothing at the short end [which surprised me a little;] and the 34 day measure, which had been steadily rising to catch up, has now converged to head sideways with the five shorter ones.  They set up more or less this way - though far less neatly - a couple of times in late ’19 and early ’20 before the final convergence from Feb. 21 to 24.  After that came the crash. 

Can’t say with any certainty that history will repeat itself only a few months later, but it does seem likely that some sort of a down-turn will materialize in the reasonably near future.  Have I hedged that prediction enough?  There are few sure things in the real world.  So I’m very curious to see how this plays out.

% Changes -

DJI30  +0.68% 

SP500 +0.87%   

NASDAQ  +0.74%    

Russell 2000 -0.38%

DJI30 Closings -

12/28/18 - 23062 

01/02/20 - 28869

11/27/20 - 29910

12/28/20 - 30404

NYSE Internals -

A/D =  1658/1509 = 1.10

A/D Vol = 0.92

New Hi/Lo = 300/6 = 50

Tuesday, December 29, 2020

Orange Arrow Down [just a little]

DJI30 Index at the close   —-   30,335.67   -68.30 (-0.22%)

The Index opened at 30494, up 88 points, immediately jumped to the hi of 30589, up 185 and another new intra-day hi; then started to fall.  It landed at the low of 30274, off 130, before 1:00.  It struggled up to about 30385 around 3:30, then stumbled 50 points into the close.



This is an outside day, with the hi higher by 63 points and the lo lower by 9.  The span was 314 points - landing right at the extremes of the rising wedge.  The 10 day average is 260.

The Santa Clause rally is rationalized, at least in part, by seasonal euphoria and the idea that smart money managers tend to be on vacation for the holidays, leaving the markets to be influenced by less sophisticated and more optimistic retail investors [speculators?]. Today might also illustrate the smart money index, which posits that dumb money flows into the markets in the first hour, while smart investors trade at the end of the day.

Momentum remains resolutely sideways.  I remain bearish.



The indexes were all down, and the Russell 2000, which had been leading the way, took the hardest hit.

% Changes -

DJI30  -0.22% 

SP500 -0.22%   

NASDAQ  -0.38%    

Russell 2000 -1.85%

DJI30 Closings -

12/28/18 - 23062 

01/02/20 - 28869

11/27/20 - 29910

12/28/20 - 30336

NYSE Internals -

A/D =  1085/2046 = 0.53

A/D Vol = 0.53

New Hi/Lo = 107/5 = 21.40

Wednesday, December 30, 2020

Yellow Arrow Sideways

DJI30 Index at the close   —-   30,409.56   +73.89 (+0.24%)

The Index opened at 30415, up 79 points, and quickly rose to 30458. There was a jagged climb to 30525, the day’s hi, up 190, before 11:30. This was approached again about 20 minutes later.  From there it was a bumpy ride down to 30400 after 2:30.  The Index then hovered between the lo of 30393 and 30430 until 3:30.  It surged up to 30475 in the final 10 minutes, then dropped about 65 points to close 16 points above  the day’s lo.

Opening above the previous close, rising to the hi in the first half of the day, then sliding for the rest of the session is a frequently recurring pattern in recent weeks. Possibly the effect of dumb money entering the fray early.  Today’s close was 6 points under the opening.  As Santa Claus rallies go, this one has been rather anemic so far. Today’s hi matched Monday’s all time intra-day hi that got eclipsed yesterday.  Today gives us a new all time closing hi - by less than six points over Monday’s.

This is an inside day, with the hi lower by 63 points, and the lo higher by 74, as the extremes migrated toward the center of the rising wedge.  Momentum is still broadly sideways, though incrementally higher this week. It peaked on 12/09, and had a lower local maximum on 12/21 that was higher than today’s value.

Volume was quite lo for the Index and the NYSE - less than 3/4 of average.

% Changes -

DJI30  +0.24% 

SP500 +0.13%   

NASDAQ  +0.15%    

Russell 2000 +1.05%

DJI30 Closings -

12/28/18 - 23062 

01/02/20 - 28869

11/30/20 - 29639

12/30/20 - 30410

NYSE Internals -

A/D =  2165/987 = 2.19

A/D Vol = 2.57

New Hi/Lo = 133/2 = 66.50

Thursday, December 31, 2020

Green Arrow Up

DJI30 Index at the close   —-   30,606.48  +196.92 (+0.65%)

The Index opened at 30418, up 8 points.  In the first few minutes it dropped to 30345, the day’s lo, off 65. It wiggled between 30360 and 30420 until 2:00 when Santa Claus suddenly arrived and the Index shot up, hitting 30516 at 2:45 and 30562 a half hour later. It finally topped out at 30637 in the last few minutes, then slid 31 points into the close on a volume surge.  This gives us new all time intra-day and closing highs. Quite a way to end the year. 

This is an outside day with the hi higher by 112 points and the lo lower by 49. I adjusted the borders of the rising wedge to accommodate these values, but the changes were slight.  So I still think the bearish potential is intact.

While the other indexes surged after 2:00, the Russell 2000 only went up a little, and finished in the red.

DJI30 momentum is still broadly sideways.  It increased at the detail level today, but only by a surprisingly small amount.  It is still below the 12/09 maximum.



I’ll give an annual update some time over the weekend.  Happy New Year.  Stay safe and healthy.



% Changes -

DJI30  +0.65% 

SP500 +0.64%   

NASDAQ  +0.14%    

Russell 2000 -0.26%

DJI30 Closings -

12/28/18 - 23327 

01/02/20 - 28869

11/30/20 - 29639

12/31/20 - 30607

NYSE Internals - 

A/D =  1881/1268 = 1.48

A/D Vol = 1.43

New Hi/Lo = 153/5 = 30.60