Won’t have a DJIA Morning Update. Will post either an Afternoon, Evening or both depending on how day unfolds.
In the meantime check out Saturday's Post - Will Monday 12-17-2018 be a Split Decision? - http://terrykinder.posthaven.com/will-monday-12-17-2018-be-a-split-decision-markets-weekend-update-12-15-2018
Markets Weekend Update 12-15-2018
Update 12-17-2018
I should have trusted my original numbers and not attempted to overthink this. My original numbers, before trying to narrow them down - at least on the basis of other support levels - has indicated the following:
Had I not attempted to "add" anything to my original calculations the result would have been substantially better - two out of three correct directionally rather than only one.
Executive Summary
The DJIA and NASDAQ have a higher probability of closing higher on Monday 12-17-2018 vs. Friday's close while the SP500 has a higher probability of a lower close Monday 12-17-2018 vs. this past Friday.
Are the DJIA, SP500 and NASDAQ Setting up for a Split Decision 12-17-2018?
After Friday's market close, it appears possible that we could be setting up for a split decision on the close this coming Monday 12-17-2018? The DJIA, SP500 and NASDAQ are in different stages of their cycles and this opens up the possibility for the NASDAQ to rise on Monday while the DJIA and SP500. To see why more clearly, it's necessary to examine the longer term levels for each market.
DJIA
NASDAQ
SP500
Friday's Closes
DJIA 24,100.51
NASDAQ 6,910.66
SP500 2,599.92
DJIA Close Within Long-Term Perspective
Friday's DJIA close of 24,100.51 puts it squarely in the 6th of 9 levels which stretch from 12,288 to 30,720. The 6th (or more accurately somewhere between the 5th and 6th levels) tends to be a point where price momentum accelerates. This is bi-directional, so if the previous momentum has been to the upside then that momentum could accelerate further to the upside. Likewise, if the previous momentum has been to the downside then that momentum could accelerate further to the downside. Near the 6th level market momentum could also reverse. This could result, for example, in a failed move higher. Additionally, within the 6th level of the DJIA is the psychological level of 24,000. For most of 2018 the DJIA has stayed above the 24,000 level. On a number of occasions when the Dow has dipped below 24,000 there has been sufficient buying to lift it back above that level. If that continues to hold true in the short-term, then the DJIA does not have much further to fall on Monday the 17th before some buyers come in and push the market back higher.
DJIA Probable Range for 12-17-2018
Probable, Not Probably
Not going to go into all the details of how the probable range is calculated except to say the following:
DJIA probable range for 12-17-2018 = 23,625 to 24,721.88
A reminder of the DJIA long-term levels -
DJIA
DJIA Weekly Chart
If we look at the above chart of the Dow Jones Industrial Average during 2018 we can see that the index has spent most of the year above the 24,000 level. 24,000 represents psychological support for the market. At extreme points it has dipped to near 23,500. Our DJIA probable range for 12-17-2018 has a low of 23,625. Given that the square root of the closing price of 24,100.51 = 155.24 we could reasonably conclude that the low for the DJIA on 12-17-2018 could be 23,945.27 (24,100.51 - 155.24) at the outside If we use the 6th level numbers as a guide we would notice that level 3 within the larger 6th level is 23,808. That 3rd level of 23,808 would also potentially offer some support should the market come under pressure and dip below 24,000 this coming Monday.
Working Through the DJIA Numbers
So, at the more extreme - but still probable - end of our range would be 23,808 (or level 3 with the larger 6th level of the DJIA long-term range). The upside for the DJIA according to our probable range is 24,721.88. However, if we again consider the square of the closing price and add it to the close we would get 24,255.75 (24,100.51 + 155.24). Looking again at the 6th level we see that level 2 within the larger level is 24,320. So, at the outside we could take 24,320 as a potential high end of the range. That gives us 23,808 to 24,320 as a potential range. If we account for 24,000 as psychological support we could narrow our range to 24,000 to 24,320. That would leave us about 100 points of downside on Monday vs. Friday's close and about 220 on the upside. 220 is 2.2 times larger than 100.
Similarly if we used our original probable range of 23,625 to 24,721.88 we find we have 475.51 points to the Monday low end of the range vs. the Friday close (24,100.51 - 23,625) and 621.37 points to the upside (24,721.88 - 24,100.51). Given both the original probable range, psychological support at 24,000 and underlying support at 23,808 there is less room for the DJIA to move down and more to room up in terms of the ranges. This would imply (along with proprietary projections not included here) that it is more probable that the DJIA moves higher rather than lower on Monday 12-17-2018.
NASDAQ Probable Range for 12-17-2018
NASDAQ probable range for 12-17-2018 = 6,750 to 7,171.88
A reminder of the NASDAQ long-term levels -
NASDAQ
The NASDAQ closed 12-14-2018 at 6,910.66. This puts the price squarely within the 1st level. There is underlying support near 6,758.40. 6,758.40 also marks the line between the current 1st level of the NASDAQ and the previous 9th level. There is resistance near 6,963.20. 6.963.20 represents the line between the 1st and 2nd levels of the current market.
Narrowing the Range
The square root of Friday's NASDAQ close is SQRT 6,910.66 = 83.13. 6,910.66 - 83.13 = 6,827.53. 6,910.66 + 83.13 = 6993.79. If we look at support and resistance we see 6,835.20 at the 6th level within the larger 1st level of the NASDAQ's long-term range. To the upside we see resistance at 7014.40 or the 7th level within the larger 2nd level of the NASDAQ's long-term range. This would give us a potential range of 6,835.20 to 7014.40. 6,835.20 is at the 6th level within the larger 1st level. We should expect that 6,835.20 could provide some support should the price move lower on Monday. Therefore it would not be unreasonable to assume that 6,860.80 could be the more likely potential low closing level for Monday which would make the range 6,860.80 to 7014.14.
Given a range of 6,860.80 to 7014.40 we would have 49.86 points of downside vs. Friday's close and 103.74 points of upside. Similar to the DJIA, the NASDAQ has more probable upside than downside, so we can assign it more probability to close higher rather than lower on Monday 12-17-2018.
SP500 Probable Range for 12-17-2018
SP500 probable range for 12-17-2018 = 2,550.15 to 2,664.23
A reminder of the SP500 long-term levels -
SP500
Unlike the DJIA, which is currently within its 6th level and the NASDAQ, which is currently within its 1st level, the SP500 is in its 7th level. Yesterday's close took the SP500 below its 8th level. The SP500 all-time high price was 2,940.91 which fell within its 9th level. Relative to the DJIA and NASDAQ market at the current time, the SP500 does not have as much support immediately below its current closing level.
Narrowing the SP500 Range
Looking at the SP500 we can make the following calculations based up the square root of its Friday close of 2,599.95. 2,599.95 - 50.99 = 2,548.96. 2,599.95 + 50.99 = 2,650.94. That would give us a Monday potential closing range of 2,548.96 to 2,650.94. Looking within our larger 7th level we can see that 2,534.40 is at the 9th level within the larger level. At the higher end of the range straddling the larger 7th and 8th ranges is 2,662.40. There is though, some degree of resistance between the 7th and 8th levels of the SP500. So, even with a range of 2,534.40 to 2,662.40 the resistance on the upside is stronger than the downside support. A more likely probable high close for the SP500 would be 2,636.80 making the overall range 2,534.40 to 2,636.80. That would leave the potential upside as 36.85 points (2,636.80 - 2,599.95) vs. 65.55 potential downside points. We will assign a greater probability that the SP500 closes lower on Monday 12-17-2018. This is in contrast to the DJIA and NASDAQ which appear to both have a higher probability of finishing higher on Monday.
Split Decision?
Are we headed to a Split Decision Monday 12-17-2018 with the DJIA and
NASDAQ moving higher and the SP500 moving lower?
Dow-NASDAQ: DJIA Afternoon Update 12-14-2018
Buy the Dips?
The DJIA and NASDAQ are both potentially approaching inflection points which may determine whether they manage to catch another bounce or offer confirmation that what is happening is something other than a short-term dip. It isn't clear yet but the market is providing clues with current levels that we should be watchful and perhaps even wary if we weren't already.
Some Levels
The DJIA has been crossing above and below 24,576 for quite some time. It hasn't meant much in the short-term. The DOW has even crossed below the psychological level of 24,000 multiple times this year. That didn't mean too much either. The NASDAQ today has crossed below the psychological number of 7,000. None of this means the market have to move lower. But they should serve as a warning. The DJIA keeps bouncing off numbers within its 6th level of 22,528 to 24,576. The NASDAQ has been working its way lower towards 6,963.20 which marks the line between its 2nd and 1st levels. 6,937.60 - if closed below on a monthly level for the NASDAQ could warn of further downward pressure.
Do Events Lead Numbers or Do Numbers Lead Events?
Most would tell you that, clearly, events move numbers. One argument against that idea is that similar events (or causes) do not result in similar outcomes (effects). The conventional wisdom about correlations, economic indicators, interest rates, inflation, etc. changes. Or, the conventional wisdom stays the same but then the events doesn't bear out any of the wisdom. It is no less likely that cause and effect are reversed 180 degrees from the conventional view. Why is it any less probable that numbers are the trigger for events? It is much easier to explain away randomness with more randomness. The argument ends up being prices are random because events are random because the Universe is random. And then, randomness somehow transforms into order. We have layers of seeming randomness created by layers of seeming chaos and on and on. But, perhaps, there is order in the numbers and we simply haven't studied enough to understand it.
Tyranny of Experts
Only the experts can tell us what our own senses reveal to us? We need someone, so we are told, to interpret the chaos and disorder for us.Without those experts, we're thought to be incapable of understanding what is going on. But many, perhaps most, of those experts are asleep. They have a philosophical or religious conception of reality that masquerades as a scientific viewpoint. In reality, they are practitioners of scientism or members of a kind of cult that purports to have the one true view.
The Matrix Has You
The Matrix was a program and a system of enslavement for the minds of those living within it. We too are often enslaved by our own thoughts and beliefs. We believe we have reality firmly within our grasp but have never even made an effort to reach out and seek it. The markets, like so much else in life, run away from our understanding. We become convinced that events happen haphazardly. We are bewildered when things don't happen as we anticipated. We console ourselves that randomness rules the Universe and we cannot conceive of the order of things. Markets are unpredictable. Changes in leadership catch us by surprise. The economy turns down at points of maximum optimism. So many are so wrong at the worst possible moment. We live in an age where people are starting to wake up. Many who think they are awake are still asleep. The Matrix has you...Still!
NASDAQ 6,963.20
The NASDAQ is approaching a potentially important level taking it from it's 2nd level of 9 into the first. Below 6,963.20 is 6,937.60 which will help signal if the NASDAQ bounces at this level or continues to move lower. Further down is $6,758.40 which is the line between the 1st level and the previous 9th level. Taken together with the DJIA repeatedly falling back into its 6th level (hinting at deceleration), the NASDAQ nearing 6,963.20 warns us that further deterioration could occur unless the market finds its footing.
Stay Tuned...
Non-Randomness: DJIA Morning Update 12-14-2018
I have been studying markets, prices, patterns and technical analysis for around 10 years. The Great Financial Crisis (GFC) spawned a deep interest in figuring out how to determine the direction of price in advance. Initially the focus was on the long-term end - looking at price patterns over years and decades - primarily looking at the gold market. There are stunning similarities in the pattern between the market top in the late 1970's and early 1980's and the market top of 2011. When people were touting that gold would continue higher I was warning that the price would move lower and could stay low for years - potentially a decade or more. I was right.
Looking at the long-term markets is interesting, but it isn't where most who are engaged in technical analysis live for very practical reasons. Money has a time value, and the investing curve has - over time - moved towards shorter and shorter time frames. Algorithms, free or inexpensive technical analysis tools, a culture that emphasizes the short-term over the long-term, and the fact that people who trade for a living (or want to) have some minimal requirements for an immediate and steady income help create and reinforce the need or desire to figure out shorter and shorter time frames for forecasting price movements. So, over time, my interest has migrated toward shorter time frames as well.
Supposedly, markets are a random walk. Price is said to be like a coin flip. On any given day (with the exception of today's close being the same as yesterday's close) you have a 50-50 chance of guessing correctly whether the price of any particular stock, instrument, commodity, stock index, etc. goes up or down. These markets are thought to react to random, unpredictable events. Investors are encouraged to study not only technical analysis (the interpretation of price charts, patterns, indicators, etc.) and keep abreast of events, actions of governments, central banks, news, expert opinion and on and on and on. Cause and effect are thought to flow in one direction from some random, unpredictable cause to some effect or end result. What if causation is a two-way flow? What if the conventional wisdom is 180 degrees opposed to what actually determines the outcome of events? What if the most criticized ideas of Pythagoras are the ones hewing closest to how cause and effect most probably truly work?
Numbers are the programming language of the Universe. The language is surprisingly simple yet non-obvious because it doesn't work the way that many people believe it ought to.
Randomness is a circular concept from one point of view. Price is random because of events are random. Things are unpredictable because they can't be predicted because they are random. Randomness, as a concept, is about as helpful as a football bat. It's the wrong way to view how to interpret the direction of price. You would do better to assume that price is the cause of events or that current price determines future price than believing in randomness. Price cannot be teased apart from cycles because linear time cannot be teased apart from cyclical time. The flow of time cannot be separated from the flow of price. Until you consider those higher level concepts, you cannot hope to have any deep or meaningful understanding of how prices move.
I have been building my knowledge and understanding of price movements and cycles for about a decade. Those years of effort are beginning to yield results. It takes time, dedication, determination and a willingness to fail, be wrong and be criticized to achieve nearly anything worth achieving. You're going to run into a lot of dead ends and make a lot of mistakes on any quest for knowledge and understanding. If you persist, either this lifetime or another, the Universe will open itself up to you. If you yield, that yielding will be reflected back to you. These ideas are being tested. They are not mere words for your entertainment. The Universe isn't random. Price isn't random. If you found these words that wasn't random either.
24,576
The DJIA has crossed back and forth across 24,576 over and over and over. When you look at prices and levels of resistance for extended periods of time it is too easy to attribute meaning to them that doesn't exist. Human beings are pattern recognition machines. We are brilliant at seeing patterns that allow us to succeed and survive. We're also masters of seeing patterns that either don't exist or prove to be utterly useless and outright harmful to our well-being. 24,576 is a number that is not important until it is. Here is a little context of the 9 DJIA levels so you can see where 24,576 fits in:
24,576 is the line between the 6th and 7th levels of 9 running from 12,288 to 30,720. This is a long-term view of the market, but looking at it can help understand moments where the right hammer and chisel blow will cleave the seemingly solid block. 24,576 is an inflection point. Why? It's the link between the 7th and 6th levels. The 6th level is where the DJIA price keeps falling to and bouncing back. The psychological level of 24,000 falls withing the 6th level. The 6th level is significant (or more accurately somewhere between the 5th and 6th levels) because it is where prices accelerate in either direction - either higher or lower. Breaking below the 7th level into the 6th opens up the potential for the market to fall back to the first level. It isn't guaranteed, but it is a necessary though not sufficient condition for rapid deceleration to occur.
The DJIA has crossed below and above 24,576 multiple time. It has crossed below the psychological level of 24,000 several times over the course of 2018. Thus far, price has recovered each time it has crossed below 24,576 and 24,000. That time may be drawing to a close. The hammer and chisel keeps working on the invisible (except to those who can see) level or line. Eventually the right blow will be delivered that will cleave the solid block and change its appearance. The Dow has been in a bull market. Many have called for a bear market for quite some time. Those who believe in randomness and the tyranny of events will always have some thing to point to. They will interpret those events to be meaningful. They believe that those events are the causes of the effect they are expecting. When the right hammer blow strikes the market will fall and it will rise when the programming determines.
Instability
We are living in a time of great instability. We are witnessing the playing out of several trends:
Hammer Time?
Not this Hammer...