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.
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