Taking Stock - Week of May 10, 2021

Monday, May 10, 2021

Yellow Arrow Sideways.

DJI30 Index at the close --- 34,742.82 -34.94 (-0.10%)

The index opened at 34784, up 8 points. And immediately shot up to 34925. It then climbed more slowly reaching 35092, up 314, before noon. From there, the price slumped to 35000 at 2:15, then dropped to 34870, up only 92, in less than 10 minutes. It then went mostly sideways until 3:45 when it dropped 127 points into the close.

Only the late drop kept this from being a clearly up day. The hi and lo were up by 280 and 277 points, respectively. This strange session provided a new intra-day hi – the 4th such in a row - by 280 points. The SP500 touched green briefly mid-day, but finished off more than a percent. The NASDAQ and Russell 2000 were red all day, and both finished off more than 2.5%. Every index took a large drop at 2:15, though they were all heading lower anyway.

This is a terrible start to the week, especially coming off Friday's all time highs in the DJI and SP500 But both indexes are still well above their support levels. Meanwhile, the Russell has been in a up-trend since its 3/25 lo. Today's lo landed right on the channel bottom. Similarly, the NASDAQ has been in a up-trend defined by its 3/05 and 5/06 lows. Sadly, though, today's lo dropped below that channel boundary. It's too early to say if that channel is invalidated, or if the border needs to be adjusted. The next few days should clarify that point.

It surprised me to discover that each of the indexes is moving within [or close to] an up-slanting channel. Each index has a different starting date, and different behavior within its channel. I've included it on today's DJI chart to illustrate. So, despite today's dismal performances, the overall outlook is not bleak – yet. As long as the support levels and channels hold, we're doing OK.

% changes -
DJI30 -0.10%
SP500 1.04%
NASDAQ -2.55%
Russell -2.59%

DJI Closings -
5/10/19 – 25942.37
5/08/20 - 24331
4/09/21 - 33801
5/07/21 – 34743

NYSE Internals -
A/D = 1104/2247 = 0.49
A/D Vol = 0.37
New Hi/Lo = 713/52 = 13.71

Tuesday, May 11, 2021

Red Arrow Down

DJI30 Index at the close   ---   34,269.16   -473.66 (-1.36%)

The index opened at 34573, off 170 points, and immediately fell another 110.  It went mostly sideways for a half hour, then fell again reaching a lo of 34075, off 668, at 10:45.  It recovered to 34330 after 11:30, then stayed between those levels the rest of the session.

This is a clearly down day, and dramatically so, with the hi and lo lower by the breath-taking margins of 519 and 666 beastly points, respectively.  The span was 497.  

No sooner do I mention that every index is in an up-slanting channel, then 3 of the 4 blast through their lower boundaries.  The DJI placed its lo right on the lower boundary, and well above its support range.  The SP500 pierced deep into its support range, and wound up near the top of it.  These two had similar contours, while the NASDAQ and Russell bounced off their early morning lows to end up only slightly negative.

% changes -

DJI30 -1.36%

SP500 -0.87%

NASDAQ -0.09%

Russell -0.26%

DJI Closings -

5/13/19 - 25325

5/11/20 - 24222

4/09/21 - 33801

5/11/21 - 34269

NYSE Internals -

A/D = 889/2488 = 0.36

A/D Vol = 0.54

New Hi/Lo = 75/95 = 0.79

Wednesday, May 12, 2021

Red Arrow Down

DJI30 Index at the close   ---   33,587.66.  -681.50 (-1.99%)

The Index opened at 34206, off 63 points, and started a step-wise tumble, hitting a lo of 33775, off 494, at 12:15. The indexes all had similar contours, falling faster in the morning than in the afternoon.  The DJI ran mostly sideways from noon to 3:00, then fell further to finish off 682 points, less than 30 above the lo that occurred only a few minutes earlier.

This is another dramatic clearly down day, with the hi and lo lower by 365 and 520 points, respectively.  The span was 653.  The DJI and SP500 blasted through their alleged support levels.  Having done so at their lows yesterday, the NASDAQ and Russell 2000 did even worse today.

Everything is falling in concert now.  NYSE internals are extraordinarily weak.   I have no idea where the bottom might be.   

% changes -

DJI30 -1.99%

SP500 -2.14%

NASDAQ -2.67%

Russell -3.26%

DJI Closings -

5/13/19 - 25325

5/11/20 - 24222

4/09/21 - 33801

5/11/21 - 33588

NYSE Internals -

A/D = 475/2899 = 0.16

A/D Vol = 0.16

New Hi/Lo = 75/58 = 1.29

Thursday, May 13, 2021

Green Arrow Up.

DJI30 Index at the close   ---   34,021.45   +433.79  (+1.29%)

The Index opened at 33624.74, up 37 points, and started climbing, reaching 34140, up 552 at 11:00.  From there it drifted down, hitting a local lo of 33840 between 1:30 and 2:00. It then climbed to 34182, the day's hi, up 594, at 3:45.  Sadly, there was then a 161 point drop into the close.

The Index gained back 433 of the 682 points it lost yesterday.  It was an inside day, with the hi lower by 26 points and the lo higher by 68.  The spread was 558.  Typically, an inside day would rate a yellow arrow.  But today's gain of over 400 points, along with gains in the other indexes, earns a green arrow.

As mentioned, all the indexes were up today, gaining back various portions of yesterday's losses.  The DJI and SP500 were green all day.  The NASDAQ and Russell touched red briefly at their early afternoon lows.

I've revised the low end of the support range for the DJI to 33526, the 4/09 lo.  There is a small cluster of highs and lows near that date, and it accommodates yesterday's lo.  I couldn't do the same for the SP500.  Except for potential round number existence near 4050, I can't see any particular reason for the location of yesterday's lo, and have no candidate for support, should it turn lower again. The NASDAQ hit a lo yesterday at a reasonable support level based on highs and lows from earlier in the year.  Similarly, the Russell's lo yesterday was in the midst of a reasonable support zone.

So the question now is – was yesterday a bottom, or is today's move just counter-current in a bigger decline? Stay tuned for the next exciting episode of “Rational Expectations?”

For today's chart, I'll show the Russell 2000.

% changes -

DJI30 +1.29%

SP500 +1.22%

NASDAQ +0.72%

Russell +1.68%

DJI Closings -

5/13/19 - 25325

5/13/20 - 23248

4/13/21 - 33677

5/13/21 - 34029

NYSE Internals -

A/D = 2263/1081 = 2.09

A/D Vol = 1.85

New Hi/Lo = 44/88 = 0.50