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Pushing On a Rope September 19, 2020

Posted by Tom in Thoughts.
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Sept. 18, 2020 – This market continues to consolidate with no clear trend. I see folks trying hard to guess the next move either up or down. I feel that getting involved with that logic is like “Pushing On a Rope”; it’s just not going to work. Sure, some will guess correctly and others not, but that’s not investing IMHO.

click to enlarge

Looking at the chart above we note the trend indicators are all Bearish / negative. I’ve labeled three price bars 1,2,3 to show that the close of those bars are all very nearly the same. A “triple bottom”? Perhaps, but it does indicate to me that (on a closing basis) that the level around 10728 is gaining in importance. A close below the 10412-ish level would likely move the market lower. A close above the 11300 level would be a bullish breakout. The third scenario is shown by the gray bracket, and that is prices would remain within the trading range for a while, bouncing back and forth.

Typically one would look to the volume for confirmation but this Friday was options expiration day so there was (expected) high levels of volume as option writers “squared up”. We’ll have to wait until next week and with all of the political cross currents there is uncertainty. And markets don’t like uncertainty. Any breakout, in either direction, may take awhile.

Short Term Sector Strength –

None of these sector are very strong trend wise (i.e. values under 200).

And so it goes. I’m heavy into Cash with a light hedge. No need to “jump the gun” or “Push on the Rope” here trying to make something happen, or worse let, trying to be a hero. Patience.

Have a good week & Take care. ….. Tom ….

Price chart by MetaStock; pie chart & table by http://www.HighGrowthStock.com. Used with permission.

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