Taking Stock - Sept 20, 2022

The Indexes stayed close to the neutral point for most of the day, then turned up before 3:00. The SP 500 finished at 3899.99,, less than a point below the late day hi, for a gain of 26.66 [0.69%.]

This week the Fed will have a two day meeting to set policy. Another rate increase of 0.75% or more is expected. This is not surprising, since, as I pointed out on Sept 1, the Fed is far behind the market-set 3 month T-Bill rate. [Link below]

There is no surprise here, so It could be that the anticipated increase is already baked into the market's reaction - if that even matters.

Meanwhile, the Index is hovering near the last reasonable retracement level from the 8/16 hi, coincidentally located in the midst of a broad support/resistance range between 3700 and 3900.

For what it's worth, the day's hi and lo were both marginally above those of Friday's session. You find whatever positives you can.

LINK

Taking Stock

After 4 up days ending in a gain of 5.15%, I was not surprised to see a pull back in the SP500 on Tuesday.  But I was astounded by the magnitude, and then the follow-through.  At Friday's lo, 3837.08, the index was almost 14 points [0.36%] under 3850.76.

This is the .786 retracement level from the 8/16 hi, the last reasonable level to support the current increasingly wobbly bull case.  It's also in the midst of a support/resistence range between 3700 and 3900, dating back to June.

The only slightly bright glimmer I can find is that after hitting the day's lo shortly after noon, the Index rose 36.25 points [0.94%] into the close at 3873.33.  Most of this rise happened after 2:30 p.m.

If the index continues falling next week, then the 6/17 lo is at risk.  Then, if that is breached, The Index could reach as lo as 3200.

Fed, Schmed

It seems the Fed likes to keep the Federal Funds rate slightly above the 3 month T-Bill rate.  

But the FFR almost always follows the T-Bill rate, and almost never leads.  

Right now it is lagging, and that might be why pundits are expecting another .75% increase in September.

Taking Stock - Tuesday, August 23, 2022 [with updates]

Let's assume that the 6/16 lo in the SP500 index at 3636.87 was the end of a corrective wave from the 1/03 all time high, and that the action since is the beginning of the next impulse wave up to new higher highs.

To confirm this notion will requite identifying a five wave form up from the 6/16 lo. If so, then wave 1 up was a gain of 308.99 points to a local hi at 3945.86 on 6/28. Wave 2 down followed the typical 3 sub-wave down-up-down pattern to a local lo at 3790.38 on 7/14, a retracement of 50.8%.

Then, wave three up terminated at the local hi at 4325.28 on 8/16, and the index is now in wave 4 down.

Retracements are frequently at or near 38.2; 50, or 61.8% of the previous move. The resulting values would be 4120.95; 4057.83; and 3994.71, respectively - indicated with red lines on the chart..

Today's session was almost flat, and the lo at 4129.86 is within 9 points of the 38.2% retracement level.

On the way up in wave 3, the index stalled in a range near 4178 [heavy blue line] a resistance level extending back to March, 2021, when the index was on its way up to the all time hi. Coincidentally, the 144 day exponential moving average [dark purple curve on the graph] is moving through that same range and can contribute to either resistance or support.

On the graph, daily highs are connected with a thin green line, lows in red, and closings in blue. The highs and lows are used In this analysis.

There are three possibilities at this point.

1 - The index is close to completing wave 4 down, and will soon move into wave 5 up, extending beyond the wave 3 hi at 4325.28.

2 - There will be a deeper retracement, probably to another of the typical levels, followed by wave 5 up.

3 - This entire analysis is wrong, and the index will continue to fall below 3636 to new lows.

I think 3 is the least likely, but the picture should clarify over the next several days.

Update - Thursday 8/25

Yesterday's SP500 lo at 4119.97 is within a single point of the .382 retracement level at 4120.85 that I mentioned on Tuesday.

This might just be a coincidence. But if the index climbs from there to close above the 8/16 hi at 4325.28, that will increase confidence that wave 4 is complete, and that wave 5 will continue up to at least 4430 [heavy green line on the chart] and possibly as high as 4650, before the next corrective wave.

Today, it finished at 4200.54, Marginally above the blue line at 4176 - a support/resistance level dating back to April, '21. If it falls back down again, wave 4 is probably still unfolding.

Update Friday 8/26

The market took a hard turn to the downside today.  I mentioned this possibility yesterday, but did not expect it, and certainly not at this magnitude.  The SP500 did a brief zig-zag in the first half hour,  dropped in the next half hour, then slid the rest of the day to finish at the lo.

The lo, 4057.66, is within 34 points of the 50% retracement level at 4023.52.  The chart shows all of wave 3 and the unfolding wave 4

Yesterday, the index peeked above the support/resistance level at 4178, but it could not hold.  This resistance is proving to be more formidable than I thought.

This could still be corrective wave 4, and that will remains my opinion until proven otherwise.  A drop under the 7/17 lo will make this position hard to justify, and a further drop below the 6/16 lo at 3636.87 will negate it completely.

We'll see how it plays out over the next several days.

Taking Stock - week of January 10, 2022

Monday, January 10, 2022

SP500 at the close ---   4,670.29   -6.74 (-0.14%)

DJI30 ---   36,068.87   -162.79 (-0.45%)

NASDAQ ---   14,942.83   +6.93 (+0.05%)

Russell 2000 ---   2,171.15   -8.66 (-0.40%)

The SP500 started negative, took a deep dive to 4582, the lo, off 95, before 11:00; and, coincidentally, 95 points below the critical support level. But it recovered the rest of the day, and finished with only a small loss.   

The DJI opened at 36175, the hi, off 56 points.  It dropped to 35640, the lo, off a stunning 592 points before 11:00.  From there it also recovered, finishing with a moderate loss. 

An encouraging point is that both of these indexes finished on up-ticks and volume surges.

The NASDAQ opened at 14752, off 184 points, and dropped to 14530, its lo, before 11:00.  It rose the rest of the day to finish at its high for a minuscule gain.

The Russell opened flat at the day's hi, and dropped near 2133, the lo, before 11:00.  After a slight rise it fell again, hitting the lo, off 45 points, before 1:00.  From there it rose into the close, finishing with a moderate loss.

All the indexes followed similar paths with deep declines in the morning and strong recoveries later in the day, mostly for losses.  If the upward momentum can continue tomorrow, this could be the end of the decline.  But that is no sure thing, so we'll have to wait and see.

Tuesday, January 11, 2021

SP500 at the close ---   4,713.07   +42.78 (+0.92%)

DJI30 ---   36,252.02   +183.15 (+0.51%)

NASDAQ ---   15,153.45   +210.62 (+1.41%)

Russell 2000 ---   2,194.00   +22.85 (+1.05%)

The SP500 opened at 2669, off a point, and fell to 4638, the lo, before 10:00.  Before 11:00 it started rising, and ran sideways for the last hour, and closed 1 point under the hi for a substantial gain.

The DJI opened at 36059, off 10, and fell to 35769, the lo, off 299 before 10:00.  It then climbed, hitting 36271, the hi, after 3:00, then slid about 30 points into the close for a moderate gain. 

The NASDAQ opened at 1419, off 24 points. It dropped to 14838, the lo, off 105 at 9:45.  It climbed until noon, then ran mostly sideways into the close, finishing with a large gain.

The Russell opened flat at 2171.  It fell to 2155, the lo, off 16 points.  It reached 2193 after 2:00, and then ran sideways into the close for a substantial gain.  

All the indexes dropped early, then recovered hitting their highs in the afternoon – when motions were more or less flat.  Clearly, recent days have been a time of above normal volatility, and that might not end any time soon.

Hang on to your hats, the ride could get thrilling.

Wednesday, January 12, 2021

SP500 at the close ---   4,726.35   +13.28 (+0.28%)

DJI30 ---   36,290.32   +38.30 (+0.11%)

NASDAQ ---   15,188.39   +34.94 (+0.23%)

Russell 2000 ---   2,176.06   -17.95 (-0.82%)

The SP500 opened at 4729, up 16 points.  It rose to 4749, the hi, up 36, at 10:45, and dropped to 4707, the lo, at 11:15.  The rest of the day it chopped mostly sideways around 4720 and concluded with a small drop on a volume surge, ending with a small gain.

The DJI30 opened at 36336, up 84 points.  It reached 36453, the hi, up 201, then fell to 36168, off 84.  It chopped around the rest of the day, dropping slightly below neutral a couple more times.  At the end, it slid a few points into the close on a volume surge.

The NASDAQ opened at 15263, up 110.  It reached the hi, 15319, at 9:45, then dropped to the lo, 15117, between 11:00 and 11:30.  The rest of the day was mostly sideways and slightly positive, ending with a slight gain.

The Russell 2000 opened at 2195, up less than a point.  It reached 2210, the hi, at 10:00, then fell to, 2169, the lo, at 11:15.  It spent the rest of the day in the red, and finished with a substantial loss.

The other 3 indexes were positive to small extents.  The Russell is often an outlier, but represents a far greater number of issues.  And even in that case, the day's hi and lo are both higher, so the span moved up, though the close was down.  So this day is inconclusive.  I hope.

Thursday, January 13, 2021

SP500 at the close ---   4,659.03   -67.32 (-1.42%)

DJI30 ---   36,113.62   -176.70 (-0.49%)

NASDAQ ---   14,806.81   -381.58 (-2.51%)

Russell 2000 ---   2,159.44-16.62 (-0.76%)

The SP500 opened at 4733, up 7 points.  It reached 4744, up 18 points, at 10:00, then fell the rest of the day.  It hit, 5650, the lo, just moments before, and 9 points below the close.  It finished with a large loss.

The DJI 30 opened at 36312, up 22.   It hovered near 36514, up 224 from 11:30 until noon.  It fell in 2 steps to 36044, the lo, moments before and 69 points under the close.  It finished with a moderate loss.

The NASDAQ opened at 15245, up 57, and reached 15260, the hi, before 10:00.  It fell in 3 steps, reaching 14782, the lo, a few minutes before and 25 points below the close.  It finished with a unusually large loss.

The Russell 2000 opened at 2177, up a point.  I reached 2197, the hi, at 10:00.  This was the first and highest of three peaks in the roller-coaster ride to the bottom.  This occurred minutes before and 5 points below the close.  It finished with a substantial loss.  It sits now at a support level extending back a year.

Friday, January 14, 2021

SP500 at the close ---   4,662.85   +3.82 (+0.08%)

DJI30 ---   35,911.80   -201.79 (-0.56%)

NASDAQ ---   14,893.80   +86.95 (+0.59%)

Russell 2000 ---   2,162.46   +3.02 (+0.14%)

The SP500 opened at 4636, off 21 points. It rose close to the day's hi before 10:30, but fell back to 4615, the lo, before 1:30.  It then rose again, hitting 4665, the hi, just before closing about 2 points lower, for a minuscule gain.

I've added a lower trend line to the chart, starting at 10/4/21.  The index might be tracing an ending diagonal.  If correct, there could be a blow off ending, followed by a sharp decline.  We'll have to see how this plays out.

The DJI30 opened at 35996, the day's hi, off 117.  It dropped to 35641, the lo, off 472, before 1:30.  It then rose

to 35935 moments before the close, 23 points lower, for a modest loss.

The NASDAQ opened at 14708, off 99 points.  It rose to 14888, near the hi, before 9:30, then dropped, hitting 14689, the lo, off 117 before 1:30.  From there it rose again, reaching 14898, the hi, moments before the close, for a modest gain.

The Russell 2000 opened at 2158, off a point.  It reached 2156, off 3, before 10:30.  It fell, hovering near  2126, the lo, around 1:30. It then climbed steadily to close at the hi for a small gain.

The indexes all had roughly similar contours, but with different magnitudes at different levels. Diversity in unity, I guess.  Though I may have that backwards.

Weekly changes -

SP500  -0.30%

DJI30  -0.88%

NASDAQ  -0.28%

Russell 2000  -0.80%

Monday, December 31, 2022

Green Arrow Up

SP500 at the close ---  4,796.56   +30.38 (+0.64%)

DJI30 --- 36,585.06   +246.76 (+0.68%)

NASDAQ --- 15,832.80   +187.83 (+1.20%)

Russell 2000 --- 2,272.56   +27.24 (+1.21%)

The SP500 opened at 4778, up 12 points, and after a rise dropped quickly, hitting 4758, the lo, before 10:00.  It stayed below 4786 until 2:00, then rose to close within a fraction of the late day hi, for a solid gain. It achieved a new closing hi, but not a new intra-day hi. This is an outside day, with the hi higher by 10 points and the lo lower by 7.  The index is still stalled near 4788, the critical resistance level identified last week.

The DJI30 opened at 36322, off 17.  It first rose, then fell to 36246, the lo, off 92, before 10:00.  It stayed below 36495 until 2:00, then rose closing within a point of the late day hi, for a solid gain.  It also achieved a new closing hi but not a new intra-day hi.  It had an outside day, with the hi higher by 11 points, and the lo lower by 58.  it also seems stalled near the earlier highs from November.

The NAQSDAQ opened at 15733, up 88.  After a brief rise it fell to 15644, off a fraction before 10:00.  It stayed below 15785 until after 1:30.  It stepped up to 15820 after 2:30, then went mostly sideways to close at 15832, the hi, for a substantial gain.  It had a higher higher by 55 points, but the bottom was flat.  It remans about 70 ponits under the early November highs.

The Russell 2000 opened at 2247, the lo, up over a point.  It reached 2284, the hi, up 38 at 10:30.  It dropped to 2260 after 11:30, and stayed at that level until after 3:00. After a slight dip it rose into the close, 12 points under the mid-morning hi.  It had a clearly up day by 26 points at the top and 2 at the bottom, and remains about 200 points under the early November highs.

All things considered, this is a pretty good start to the week.  But the situation is still ambiguous.

Tuesday, January 4, 2022

SP500 at the close ---   4,793.54   -3.02 (-0.06%)

DJI30 ---   36,799.65   +214.59 (+0.59%)

NASDAQ ---   15,622.72   -210.08 (-1.33%)

Russell 2000 ---   2,268.87   +23.56 (+1.05%)

The SP500 opened at 4805, up 8 points and rose to 4819, the hi, up 22, before 10:00.  It then fell, hitting 4774, the lo, off 22, at 2:00.  It climbed again, hitting 4807 at 3:50, but then fell 11 points to close with a minute loss, on a volume surge. 

The Index is still hung up near the 4788 critical resistance level. 

The DJI30 opened at 36636, the lo, up 51 points, and hit 36935, the hi, up 350, before 11:00.  It drooped to 36740, up 155 at 2:00, rose to 36890 at 3:50, then dropped 90 points into the close on a volume surge.  Still, the Index achieved a new intra-day hi by 255 points and at the closing by 215. Obviously, this is a clearly up day that spent every moment well into positive territory.  

The NASDAQ opened at 15852, the hi, up 19, but fell to 15538 at 11:00.  It stayed below 15607 until after 3:00, reaching 15512, the lo, off 320, when it had a slight rise, but then fell into the close on a volume surge.  Because of the opening gain this was an outside day, but the lo was lower by 132 points.  

The Russell 2000 opened at 2247, the lo, up 2 points.  It immediately rose to 2288, the hi, up 43.  It then slumped, reaching 2258 after 11:00.  From there it meandered into the close for the day's largest gain.  Th hi was up 4 points, but the lo was dead even with yesterday's.

The indexes were strangely disconnected today, so no general trend can be identified.  I'm taking this to be consistent with the idea that they are experiencing an ongoing corrective wave, against a higher level upward thrust; though the DJI and Russell might be starting the next upward wave.  This is all very uncertain.

  

Wednesday, January 5, 2022

Red Arrow Down

SP500 at the close ---   4,700.58.  -92.96 (-1.94%)

DJI30 ---   36,407.11   -392.54 (-1.07%)

NASDAQ ---   15,100.17   -522.54 (-3.34%)

Russell 2000 ---   2,194.00   -74.87 (-3.30%)

This was not very good day, right from the beginning.  Then, after 2:00, it got really bad, for all the indexes.  Changes of a percent or so, in either direction, are not uncommon.  Changes of 2 percent are uncommon.  Changes of over 3% are rare.

The SP500 dropped almost 2% today, and is now closer to the critical support level than it is to the critical resistance level I mentioned several times recently.  If that is breached significantly, then the presumed up-trend

is refuted.

Futures are close to flat, but slightly positive as I write this, shortly after 9:00 p.m. EST.  We'll see if that can carry into the next session.

Thursday, January 6, 2022

SP500 at the close ---   4,696.05   -4.53 (-0.10%)

DJI30 ---   36,236.47   -170.64 (-0.47%)

NASDAQ ---   15,080.87   -19.31 (-0.13%)

Russell 2000 ---   2,206.37   +12.37 (+0.56%)

The SP500 opened and closed slightly negative.  In between, it stayed within 25 points above and 29 points below neutral.  It was inconclusive after yesterday's large loss.  At the low it was 6 points under the critical support level at 4617.  A significant breach will suggest further losses.

The DJI 30 opened slightly positive and spiked up 57 points after 12:30.  The rest of the day was spent in the red, ending with a moderate loss.  At the lo, it went slightly under the 144 day EMA.

The NASDAQ opened negative and hit its minimum after 10:00.  I spent most of the day slightly positive, but finished with a small loss. At the lo, it went slightly under the 145 day EMA.

The Russell 2000 opened flat and fell to its lo before 10:30.  It spent the rest of the day positive, and finished with a modest gain.  It spent the day below its moving averages.

The bleeding didn't completely stop today, but it slowed down substantially. The gain in the Russell is hopeful.  Let's hope tomorrow brings a recovery.