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Market Hitting “Pause” October 16, 2020

Posted by Tom in Thoughts.
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Oct. 16, 2020 – Well the week started with a bang and a price gap up. This on hopes of a stimulus package and looking forward to corporate earnings . .. . hint: the banks did well & hoping the rest follows. But the last 3 days were less than impressive.

The chart below shows “price strength” back to neutral and the price action seems to bounce back & forth within the price channel. Volume during the last half of the week was low, just not much demand. There could rightfully be a concern about reaching back to early September at the high of 12074, a logical resistance level (green line).

click on chart to enlarge

The first level of price support is 11572 (red line), then 11124 (where things start to get concerning) and the recent swing low of 10519 (if the wheels start coming off).

It appears that the market is comfortable with a Biden win and the stimulus being delayed until after the election. But if a package doesn’t get done in early November it could be a different story. The consumer is not as healthy as many think.

Sector strength (short term) is shown in the table above. Tech continues to show strength but Utilities are a little surprise. And lastly the 5 day % price return for the top sectors is shown below. This provides a view of how broad / narrow price strength is.

click to enlarge

Please feel free to leave a comment. Always interested in what you like, dislike or would hope to see. Have a good week. ………… Tom ………..

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

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