Taking Stock - weeks of Oct 5 to October 16, 2020

Monday, October 5, 2020

Green Arrow Up

DJI30 Index at the close —-   28,148.64   +465.83 (+1.68%)

The index opened at  27,825.42, up 143 points. It immediately rose to 27965, and reached 28080 before 11:00.  From there it was more or less sideways until 2:00. It rose  to 20146 at 3:15, and went sideways the last 45 minutes, hitting the hi of 28163 a few minutes before the close. The lo to hi span was 337 points.

This is a clearly up day with the hi, lo and close up by 301, 442, and 456 points, respectively.  Last Wednesday I cited passing 28356 as the first key indicator that the market is trending up.   That’s a only a little less than 200 points above today’s hi.

But until that happens there is still no clear direction.  I’m hoping we’ll get that this week.

Closings -

10/05/18 - 26447

01/02/20 - 28668

09/05/20 - 27501

10/05 20 - 28249

NYSE Internals -

A/D = 2290/773 = 2.96

A/D vol = 4.35

New Hi/Lo = 119/22 = 5.41

Tuesday, 10/6/20

Red Arrow Down

DJI30 Index at the close   —-    27,772.76-   375.88 (-1.34%)

The index opened at 28214, up 66 points.  It went mostly sideways with a slight upward tilt until 2:00 when it turned up, reaching the hi of 28354 at 2:45. It then went into a straight verbal drop, hitting 27810 about 20 minutes later - a bone crushing collapse of 544 points.  And that wasn’t even the lo.  The index bottomed at 27728 at 3:07, then rattled into the close, 45 points higher. The SP500, Russell 2000 and NASDAQ also took hard falls at exactly the same time.  I’m seeing this blamed on trump’s refusal to consider a stimulus bill put forward by the House.  But how can anyone be surprised?

I just read these words yesterday. [link in comments]

“So, when I see many pundits pointing to the decline we experienced on Friday as being caused by the announcement that our President contracted the coronavirus, I simply view it as a catalyst to move the market in the manner in which it was predisposed to move at the close on Thursday”

It’s the same today.  trump’s refusal to do what is right and needed for our country might indeed have given the markets the nudge they needed to fall.  All of them moving in lockstep at the exact same time supports this view.  But such a reaction would be ephemeral.  If the market continues to fall the rest of the week, it will be because it was on the verge of falling anyway, not because of whatever occupant 45 says or does.

This is an outside day, with the hi and low far beyond yesterday’s 337 points by wide margins at both ends. Today’s span was 626.

Remember, I said passing above 28356 was a benchmark for a rising trend.  The index came within a couple points of that level, did a hard bounce, and fell like a rock.  Today’s low and close are in the range of where they were on Thursday, so the drop might not mean anything. This could simply be a continuation of sideways motion.  And getting rejected at a resistance level doesn’t mean there can’t be a break through on a second or third try.

So - today was dramatic, but a lot less meaningful than it might seem at first look.

Closings - 

10/05/18 - 26447

01/02/20 - 28869

08/04/20 - 27662

09/06/20 - 27773

NYSE Internals -

A/D = 1163/1869 = 0.62

A/D Vol = 0,37 

New Hi/Lo = 148/18 = 8.22

Wednesday, October 7, 2020

Daily Arrow - Green, Up

Weekly Arrow - Yellow, Sideways

DJI30 index at the close   —-   28,303.46   +530.70 (+1.91%)

The Index opened at 27972, up 98 points, and immediately jumped up to 28100.  By 10:30 it reached 28200, and ran sideways near that level until 1:45.  By 2:30 it was above 28300.  It reached the hi of 28370 at 3:10 before sliding into the close.  The lo to hi span was 398 points.

This is a clearly up day, with the hi, lo and close up by 15 [!], 239 and 531, respectively.

The hi exceeded the benchmark level of 28356 by 14 points, or 0.05%.  Yesterday there was a hard bounce from that level.  Today the Index challenged it again, and slid slowly back - only by a little.  I said, “getting rejected at a resistance level doesn’t mean there can’t be a break through on a second or third try.”  Well, today we had a second try, and a second rejection.  But the rejection was soft, the Index is lurking close to that benchmark level; and it wouldn’t take much of a surge to get above it tomorrow.

Stay tuned because — who know?

Closings -

10/05/18 - 26447

01/02/20 - 28869

09/04/20 - 28133

10/07/20 - 28303

NYSE Internals -

A/D = 2219/817 = 2.72

A/D Vol = 4.81

New Hi/Lo = 137/23 - 5.96

Thursday, October 8, 2020

Green Arrow Up, a little

DJI30 Index at the close   —-   28,425.51   +122.05 (+0.43%)

The Index opened at 28349, up 45 points, and quickly rose to 28432.  There was a choppy rise to the hi of 28459 between 10:30 and 11:00.  Then there was a tumbling drop to the low of 28335 before 11:30.  It rose to 28400 over the next hour, then went mostly sideways the rest of the day.

This was a clearly up day, with the hi, lo and close up by 89, 364, and 122 points, respectively.  The majority of this was at the low end of the range, and the day’s lo to hi range was a surprisingly narrow 124 points.  This is the smallest span since 84 points on January 17th, back when various aspects of life seemed to make some sort of sense.

Todays action was the 3rd time in 3 days that the index challenged the benchmark level of 28365, the hi from September 16, which I previously reported as 28356; sorry for the typo. This level is now indicated with a red line on the chart.  Today’s hi exceeded it by 94 points - immediately followed by a drop of 124: the day’s entire span in about an hour.  You don’t often get a third bite at the cherry.  But today’s effort was a success - though of a rather tepid sort.  The day’s range surrounds the benchmark level, and the hi was only 60 points above it [0.21%.]  So the question of whether the market is really going up to approach the Feb 12 hi remains unanswered.

Tomorrow ought to tell us something, but I’ve been thinking that for quite a few days now.

Closings -

10/08/18 - 26487

01/02/20 - 28869 

09/04/20 - 28133

10/08/20 - 28426

NYSE Internals -

A/D = 2313/723 = 3.2

A/D Vol = 6.44

NewHi/Lo = 162/14 = 11.57

Friday, 10/09/20

Green Arrow Up

DJI30 Index at the close   —-   28,586.90   +161.39 (+0.57%)

The Index opened at 28534, up 106 points.  It quickly rose to 28590, then slumped to the day’s lo, 28441, before 10:30.  It hit the hi of 28676, up 251, just after noon, and then made a slow descending 90 point slide into the close.   The lo to hi span was 236 points, almost twice yesterday’s 124, but far under the 10 day average of 371. Except for yesterday, this is the narrowest span since 222 points on 8/18.  

The market is rising.  This is another clearly up day, with the hi, lo and close up by 217, 106 and 161 points, respectively.  These are solid, but not strong numbers, and a gain of just over a half percent is rather tepid.  But short term moment is clearly up, for now.

The close is 221 points above the benchmark level of 29365 - so that challenge for a rising market has finally been met.  The next test will be the 9/03 hi of 29199 [indicated with a red line,] only 613 points above today’s close.

Closings -

10/10/18 - 25599

01/02/20 - 28869

09/09/20 - 27705

10/09/20 - 28567

NYSE Internals -  A/D and A/D vol are neutral.

A/D = 1544/1464 = 1.05

A/D Vol = 1.00

New Hi/Lo = 178/17 -10.47

Monday 10/12/20

Green Arrow Up

DJI30 Index at the close   —-   28,837.52   +250.62 (+0.88%)

The Index opened at 28671, up 84 points, and immediately hit 28690.  It kept climbing and hit the hi of 28958 at 1:30.  From there it slid 120 points into the close. The lo to hi span was 298 points.

In the 12 trading days since the local lo on 9/24, there have only been 3 down days. The largest of them, at -1.30%, was a brief response to occupant 45’s admission that he had CV-19.  On 5 of those days, the gain was between 1.20% and 1.91%; the largest of those happening the day after the CV incident.

This has been a fairly orderly rise in a well-defined channel.  But a gain of 2300 points, or 8.58 %, in 12 days hints at irrational exuberance.  The Index, at today’s hi, was briefly positive for the year, for only the 2nd time since 2/21.  But the 120 point drop in the last 2 1/2 hours brought it back below that level by 31 points.

The 9/03 hi of 29199, only 361 points above today’s close, now seems within reach. From there it is not very far to 29569, the all time hi reached on 2/12, and only 69 points above the top of the chart.  

Along with round number resistance at 29000, those are the next critical values to pass if this surge is to continue.  

Closings -

10/12/18 - 25340

01/02/20 - 28868

09/11/20 - 27885

10/12/20 - 28838

NYSE Internals -

A/D = 1859/1170 = 1.59

A/D Vol = 1.64

New Hi/Lo = 190/14 = 13.57

Tuesday, October 13, 2020

Red Arrow Down

DJI30 Index at the close   —-   28,679.81  -157.71 (-0.55%)

The Index opened at 28765, off 73 points.  It zig-zagged in a rapid series of over ten mostly lower lows and highs, hitting the day’s lo of 28604 after 2:30.  It climbed back up to 28760 at 3:30, then fell about 80 points in the last 20 minutes.  The lo to hi span was a rather narrow 205 points.  The 10 session average is 359, down from 500 on 10/01, in a possible sign of growing complacency.

This is a clearly down day, with the hi, lo and close off by the rather modest margins of 149, 55 and 158 points respectively.  These values are well within the rising channel, so there is no reason to think the surge is over yet.  But, it might be getting close. Upward momentum appears to be slowing.

The hi, 28808, occurred in the first half hour of the trading session, and might represent round number resistance at 28800.  The benchmarks I mentioned yesterday, at 29000, 

the 9/03 hi of 29199, and the all time hi of 29569 are still all within sight - if the Index can get there.

Closings -

10/11/18 - 25053

01/02/20 - 28869

09/11/20 - 27666

10/13/20 - 28690

Internals -

A/D = 998/2048 = 0.49

A/D Vol = 0.31

New Hi/Lo = 100/17 = 5.88

Wednesday, October 14, 2020

Red Arrow down

DJI30 Index at the close   —-   28,514.00   -165.81 (-0.58%)

The index opened at 28731, up 51 points.  Within 20 minutes it rose to 28793, the hi of the day, up 113 points.  From there it was a 331 point drop to 28462, the day’s lo, before 12:30. There were 3 more rises, punctuated by drops below 28500, with the last and highest of them reaching 28590 after 3:00.  It was followed by a 76 point fall into the close.

This is basically a continuation of yesterday’s choppy decline.  The lo and close, only 52 points apart, ended up right at the bottom of the current up-slanting channel.  This does not indicate that the surge is over.  If this surge is an impulse, today’s lo might be the end of wave 4.  In this scenario, wave 1 was the 1324 point rise from the 9/24 lo to the 10/2 hi.  Wave 2 was the 478 point drop [36.1% retrace] to the 10/2 lo.  Wave 3 was the 1575 point rise from the 10/2 lo to the 10/12 hi.  If today’s lo is the end of wave 4, then the 496 point loss from the 10/12 hi is a 31.5% retracement.  Then wave 5, ahead of us, would likely be another gain of 1300 points or more.  That would land near 29760, about 200 points above the 2/12 all time hi of 25969

Alternatively, wave 3 could still be unfolding.  If that is the case, the outlook is even more bullish.

The other alternative is that this surge is over, and the next wave down is about to start.  A sharp decline tomorrow would be consistent with this possibility.  A rise above the 9/12 hi would refute it.

Closings -

10/12/18 - 25340

01/02/20 - 28869

09/14/20 - 27993

10/14/20 - 28514

NYSE Internals -

A/D = 1186/1859 = 0.64

A/D Vol = 0.78

New Hi/Lo = 88/19 = 4.63

Thursday, October 15, 2020

Yellow Arrow Sideways

DJI30 Index at the close   —-   28,494.20   -19.80 (-0.07%)

The Index opened at 28323, off 190 points, and immediately dropped to 28182, off 332.  By 10:00 it recovered to 28356, off 158.  After a drop to 28240 it rose to 28400 before 11:30.  From there it ran sideways until 1:00, then climbed slowly to the high of 28534 after 3:30, the hi for the day, and at plus 22, the only bob into positive territory.  From there it was a 42 point fall into the close.  The span was 354 points, the largest since last Wednesday.

After a sharp drop at the onset, the Index climbed pretty steadily the rest of the day.  The lo dropped outside the up-slanting channel, but the hi and close were right at the lower border.  So the drop from Tuesday’s hi might be done.  Or not.  Today’s action was more confusing than clarifying. 

I see predictions of a drop of uncertain magnitude followed by a strong rise into new highs next year and beyond.  Contra that is the idea that the effects of CV-19 on the underlying economy will be a strong and long lasting head wind.  Unemployment is still hi, millions of families might be facing eviction, and thousands of businesses that have closed or cut back might never recover.  But the indexes are disconnected from the economy, over-valued and over-bought.

Closings -

10/12/18 - 25340

01/02/20 - 28869

09/14/20 - 27993

10/14/20 - 28494

NYSE Internals - 

A/D = 1707/1327 = 1.29

A/D Vol = 1.64

New Hi/Lo = 73/20 = 3.65

Friday, Oct. 16, 2020

Green Arrow Up - a bit

DJI30 Index at the close   —-   28,606.31   +112.11 (+0.39%)

The Index opened at 28571, up 77 points, and within minutes reached 28694, up 199.  It went on to the hi of 28843, up 349 at 10:30.  From there it was a slow slide to the lo at 58571 shortly after noon.  It went sideways until 1:00, then slowly rose to 28780 at 3:00 pm, followed by a 174 point fall into the close. 

This is a clearly up day, with the hi, lo and close higher by 307, 389 and 112 points, respectively.  The lo to hi span was a rather modest 272 points.  

This would have been a healthy gain at the day’s hi, but with the slump in the last half hour it wound up at only a tepid 0.4%. The hi just barely got back inside the up-slanting channel, which has a pretty steep rise, but the low and close stayed outside.  So the net of this week is that the Index went nowhere, with values located above last Friday’s lo, but below this Monday’s hi.

Whether this is a sideways move before another increase or a top formation that precedes a decline is difficult to discern.  Momentum is still up, but might be losing steam.  Despite my frustrations, the Index refuses to give a clear indication of where it is headed.

Closings -

10/16/18 - 25798

01/02/20 - 28869

09/16/20 - 28022

10/16/20 - 28571

NYSE Internals -

A/D = 1245/1785 = .70

A/D Vol = 437/434 = 1.01

New Hi/Lo = 122/9 = 13.56

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

Taking Stock - September 21-25, 2020

Monday, Sept 21, 2020

Red Arrow Down

DJI30 at the close   —-   27,147.70   -509.72 (-1.84%)

The index opened at 27485, off 173 points. That was the day’s hi.  There was an immediate drop to 27165, off 492.  By 11:30 it reached the day’s lo of 26715, a stunning loss of 942 points in a little over 2 hours.  From there it galumphed along, staying under 26870 until after 3:00 when it climbed up 178 points to the close.

From Friday’s hi of 27945 to today’s lo of 26715 is 1232 points. The day’s span is 770 points.

I’m not a great Elliott wave reader, but this is how it looks to me.  The drop from the 9/03 hi to the 9 /11 low was 1751 points. This was wave 1 down at some level of trend.  The 9/16 hi was the top of a wave 2 recovery of [amazingly] 916 [!] points.  This exceeded the 50% retracement level by 41 points, or 0.14%.  How much accuracy do we need?  Wave 3 down is now in progress.  It is never the smallest, and is often the largest.  So it will span more than 1751 points.  A target magnitude of 1.382 x 1751 = 2420, landing at 25945 is not unreasonable.  However, it could be much lower.  After that comes another recovery in wave 4, then wave 5 down to a longer term lo.

If that holds, a wave 4 retirement of 50% would top out at 27155.  Then if wave 5 = wave 1, then the lo would be at 25403.  The net drop from the 9/03 hi of 29199 would be 3796 points.  This is all speculative, and probably optimistic.

The main indexes were all in the red all day.  The SP500 had a similar contour to the DJI, and finished off 1.16%. The NASDAQ was down early, but finished strong to only be off 0.13%.  The Russell 2000 took a real beating.  It fell hard early, then was flat most of the day, finishing off 3.35%.  

On Thursday I said this about the indexes, “if the fragmentation resolves into coordinated downward motion, the results could be painful.”  i also said a DJI break below 27000 would confirm a downward trend. It finished 148 points above that benchmark, but was almost 300 under at the low.  I suspect the partial recovery in the late afternoon is a counter-current sub-wave, and the decline will continue tomorrow or Wednesday.  If I’m correct, this would be a 3rd wave of a 3rd wave, and those declines are brutal.  Back in March - not so very long ago - it bottomed just above 18000.

 
Closings -

9/21/18 - 26744

1/02/20 - 28869

8/21/20 - 27930

9/21/20 - 27148

NYSE Internals -

A/D = 443/2623 = 0.17

A/D Vol = 0.12

New Hi/Lo = 19/41 = 0.45

A. D. 536 - A Terrible Year Leading Into A Terrible Century

You think 2020 is bad?

You're right.  It's a terrible, horrible, no good, very bad day.

But A.D. 536 was worse.

Taking Stock - Mid-September edition

 A week's worth of my market musings.

Monday 9/14, 2020

Green Arrow Up

DJI30 Index at the close   —-   27,993.33   +327.69 (+1.18%)

The index opened at 27719, up 53 points, and immediately jumped up to 27875.  It reached a hi of 28064 before 10:30.  After that it was mostly sideways. It reached the final hi of 28086 a 1:00 and again 10 minutes before the close, with a dip in-between to 27915 before 3:30. In the last 10 minutes there was a 46 point drop into the close.

The lo to hi spread was 367 points the smallest since 280 on 8/31.  The 10 day average is 554.  

The up-down-up contour of the last four days might be an a-b-c counter-trend move in a downward impulse.  If so, this could go on into a more complex pattern, or turn sharply down tomorrow.

The alternative possibility is a continuing increase from the 3/23 bottom, with the potential of a new all time high. The very strong NYSE Internals today are consistent with this view, but the last time this happened on 7/15 there was no follow through.

Closings -

9/14/18 - 26155

1/02/20 - 28869

8/14/20 - 27931

9/14/20 - 28018

NYSE Internals - Strongest since 7/15, an unremarkable day with a 379 point span and a 228 point gain, closing at 26870. 

A/D = 2448/591 = 4.14

A/D Vol = 5.59

New Hi/Lo = 60/12 = 5.0

Some Seeking Alpha articles I want to save

Socks are overbought 8/28/2020

Value preference

S&P500 Structural Flaws

Intel 8/27/20

2020 isn't 1920

It's not the FED 8/26/20

Best Blue Chips for Dividends 9/14/20

High Dividend Yields 9/17/20

More dividend plays. 9/21/20

Still more Dividend Plays - Div 1st approach 10/16/20

Taking Stock

I post an update of the Dow Jones Industrials every business day on my Face Book page. Yesterday's was long and, I think, meaningful, so I'm reposting it here.

Monday, July 13, 2020 Yellow Arrow Sideways
DJI30 Index at the close —- 26,085.80 +10.50 (+0.04%)

The index opened at 26226, up 150 points. It spent the next half hour between 26240 and 26330, then started rising, hitting a hi of 26525 at 11:30 on the way the daily hi of 26639 at 1:45.

Except for a brief bounce of about 100 points between 2:30 and 3:00, the rest of the day was down. The image of an avalanche springs to mind. The lo - a mere 42 points below the close - occurred only 4 minutes before the end of trading. The day’s total span was 595 points, and it all occurred after 1:45.

This was a dramatic reversal in the last 2 hours. I actually felt hopeful around lunch time Today’s hi was the highest since the pop above 27000 from 6/05 to 6/10. A glance at Graph 1 shows that recent action is now the second sideways move of more than a month’s duration since the 3/23 lo. This does not look like any kind of impulsive upward move.

The red and orange horizontal lines represent the Fibonacci .681 and .786 retracements of the drop from the Feb 12 hi to the March 23 lo.

Graph1 - two sideways moves

The only practical alternative view is that this is an unusually long and extraordinarily complex counter current move - the the main thrust being down, shown in Graph 2. The Index is moving into a trend line wedge where something will have to give pretty soon.



Graph 2 - Into the Wedge

In Graph 2, the peak on June 8 defines the top border of a potential down-sloping channel from the 2/12 hi that is a stunning 10684 points wide. If this concept has any validity, it could lead to an ultimate lo far below the 18214 reached on 3/23. 

In 1929, the Index lost something like 89% of its value. Can you imagine the DJI30 Index bottoming at about 3000? It needn’t be that extreme to be devastating.

The 3/23 local bottom represented a loss from the 2/12 top that was within 50 points of a Fibonacci 38.2%. A 50% loss would put the Index at 14784. A 61.8% loss would bottom at 11295. Other potential support levels are in the regions of 1600, 1500 [support/resistance levels from 2014 -16] 14165 [the 2007 all time hi] and around 13000, 11000 and 10000 - support/resistance levels from 2010 to 2013. These things are shown in the third Graph, labeled Trend From the 2009 Bottom.


The Fibonacci 61.8% loss at 11293 is in the broad range of round number support from the last few of those mentioned. So the range from 10000 to 13000 is a reasonable target for the ultimate low, which could happen this year or off a few years into the foggy and unpromising future.

 Graph 3 - several possible support levels

The effects of the corona virus on the population and the economy of this country are going to be far worse than what we have seen so far, due to the abysmal denial and mismanagement of donald j trump and his corrupt minion governors in republican controlled states. Some are starting to realize it now, but what they are doing is far too little and far too late. Tragically, this devastation was largely preventable, as a few nations like New Zealand have shown. Even here in Michigan, where Gov. Whitmer has tried to do things right in the face of organized and intimidating armed opposition, we have been trending the wrong way for almost a month. Can you guess why?

Stocks are at an epic level of disconnect from the underlying economy - which is weakening as you read this. When this situation rights itself, the spring-back will overshoot, and probably by a large margin. That will be the time to buy. 



Stay tuned. Pictures at 11000.

Closings -
7/13/18 - 25019
1/02/20 - 28869
6/12/20 - 25605
7/13/20 - 26086

NYSE Internals -
A/D = 1093/1899 = 0.58
A/D Vol = 0.54
New Hi/Lo = 119/6 =19.83

Taking Stock

I've been reporting on stock market activity on my FaceBook page every business day.  I thought yesterday's events warranted a more permanent record, so I'm copying it here.  Today is Good Friday, and the markets are closed.

Thursday, April 9, 2020

Green arrow up
DJI30 Index at the close —- 23,719.37 +285.80 (+1.22%)

The Index opened at 23691, 251 points above yesterday’s close. The high was 24009, and it was approached at 10:00, 1:00 and 1:30. Round number resistance bent, but did not break. The next move was a drop of 500 points to 23504 just before 3:00, followed by a choppy ride into the close. The last move of the day was a gyrating drop of 90 points in the last 25 minutes.

This is a clearly up day, with the hi, lo and close all higher than yesterday’s.

Today’s good news and bad news:

Good - Fed to provide $2.3 trillion to prop up the economy - just what a liquidity fueled, significantly over-valued market needs. 

Covid-19 cases reported to be slowing. We’ll see how well that holds up given, frex - Arkansas and Trump’s great desire to reopen the economy.

Bad - Horrible unemployment numbers, exceeding expectations with over 6 million new claims on top of the over 10 million from the last 2 weeks.
Teenagers spending is off 13% YoY.
Nearly 1/3 of tenants didn’t pay rent this month.

All of this is from the Yahoo Finance news items listed below the stock chart.

 Today’s lo to hi span was 505 points, the lowest since 409 on 2/20. That looked like an outlier at the time, but got swamped from the 24th on. For context, the ten day average then was 207 points. On April Fool’s Day it was 1039. Now it’s 778.

Today’s moves would have looked wildly disjoint as recently as the middle of February. But now it’s the tamest day we’ve seen in 6 weeks. Is this some sort of new complacency? This market is remarkably resilient. And I find that to be frightening.

The breaking news is that with the markets closed tomorrow for Good Friday, the SP500 had it’s best week in 46 years. The Nasdaq had it’s best week since 2008. Hmmm - what happened after that? For the DJI30, it was the best week in 2 weeks! Go figure.



While we’re at it, let’s have a look back 46 years ago to 1974. Context matters. I can’t quickly find S&P data for 1974, but DJI30 should be good enough. The index averaged 4764 in Dec.1973 and 3071 in December 1974, a 46% loss. So that big gain happened in the midst of a brutal bear market and clearly didn’t last long.

But wait - there’s more. The DJI topped at 7785 in Dec ’65 and bottomed at 2145 in July ’82 - a bone crushing 73% decline that took 17 years to play out. So the ’74 bear market was just an episode in a much longer devastating trend that nobody seems to remember today. Here's a link to the chart, and you can play around with the dates, if you’re so inclined.


Historically, most of the largest short term gains - covering a day or a week - have occurred during bear market rallies. These things treacherously offer false hope. I believe this financial exuberance is irrational and the pandemic optimism will backfire horribly. I would love to be wrong.


Stay safe out there. Or, better yet, just stay home.

NYSE Internals
A/D = 2584/422 = 6.12
A/D Vol = 3.52
New Hi/Lo = 12/2 = 6.00

Notes on the graph --

The fine green, blue and red lines indicate daily hi, close and lo values, respectively.
The heavy green line at the top is a projection of the all-time high of Feb12.
The down-slanting channel contains the drop from the all-time high.  It was violated this week, but i kept it for reference.
The horizontal channel indicates sideways motion.  It looked like it was in effect since the bottom on Mar 23. Possibly obsolete now.
The falling blue line is the 233 day EMA.