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