Most in the media are touting that the Dow Jones Industrial Average, S&P 500 and the Nasdaq Composite will soon be setting new all-time closing highs. This measure is meaningless as technicians draw trends through all-time intraday highs. It is so misleading in hindsight if an average sets a new closing high then fails to set a new intraday high.
I am not saying that closes are not important. They are used to track moving averages and weekly, monthly, quarterly, semiannual and annual closes are the inputs to my proprietary analytics.
Here’s an important reason for tracking both closing highs and lows and intraday highs and lows. Most think all five major averages set their lows on Christmas Eve. Not so, the Dow and S&P set their intraday lows on December 26. This is true for so many stocks! For almost all tickers that set their intraday lows on December 26 that day was a “key reversal,” which was a signal that a tradeable rally would begin. If you tracked only closing lows, you missed this important buy signal.
All five major equity averages are in bull market territory from their December 14 or Decenber 26 Christmas lows. The Dow Jones Industrial Average is up 21.6% from its December 26 intraday low of 21,712.53 and is just 2% below its all-time intraday high of 26,951.81 set on October 3. The S&P 500 is up 23.9% from its December 26 intraday low of 2,346.58 and is just 1.1% below its all-time intraday high of 2,940.91 set on September 21. The Nasdaq Composite is up 29% from its December 24 intraday low of 6,190.17 and is just 1.8% below its all-time intraday high of 8,133.30 set on August. 30.
To complete the analysis, the Dow Jones Transportation Average is up 26.3% above its December 24 intraday low of 8,636.79 but is 6.1% below its all-time intraday high of 11,623.58 set on September 14. The Russell 2000 is 25.1% above its December 24 intraday low of 1,266.92 but is 9.0% below its all-time intraday high of 1,742.09 set on August 31.
Here’s Last Week’s Scorecard
- The Dow Jones Industrial Average (26,412.30 on April 12) is above its annual pivot at 25.819 and above its 200-day simple moving average of 25,267.37. My monthly and semiannual value levels are 25,513 and 24,340, respectively, with its annual pivot at 25,819 and weekly pivot at 26,125. The all-time intraday high of 26,951.81 was set on October 3 and its second quarter risky level is 27,891. Its weekly chart is positive but overbought.
- The S&P 500 (2,907.41 on April 12) is above its 200-day simple moving average of 2,762.55 and above its annual pivot at 2,867.1. My monthly and semiannual value levels are 2,728.5 and 2,668.8, respectively, with the annual pivot at 2,867.1 and weekly pivot at 2,892.1. The all-time intraday high of 2,940.91 was set on September 21 with its second quarterly risky level at 2,985.1. Its weekly chart is positive but overbought and has become an “inflating parabolic bubble.”
- The Nasdaq Composite (7,984.16 on April 12) remains above its 200-day simple moving average of 7,501.17. My monthly, annual and semiannual value levels are 7,373, 7,370 and 7,274, respectively, with a weekly pivot at 7,972. The all-time intraday high of 8,133.30 was set on August 30 with the quarterly risky level at 8,367. Its weekly chart is positive but overbought and has become an “inflating parabolic bubble.”
- The Dow Transportation Average (10,912.19 on April 12) remains above its 200-day simple moving average of 10,499.16. My monthly and semiannual value levels are 9,858 and 8,858, respectively, with a weekly pivot at 10,433 and annual and quarterly risky levels at 10,976 and 11,372, respectively, with its all-time intraday high of 11,623.58 set on September 14. Its weekly chart is positive but overbought.
- The Russell 2000 (1,584.80 on April 12) is just above its 200-day simple moving average at 1,571.79 and a weekly pivot at 1,553.66. My semiannual and monthly value levels are 1,504.17 and 1,436.97, respectively, with annual and quarterly risky levels at 1,612.54 and 1,667.15, respectively, with its all-time intraday high of 1,742.09 set on August 31. Its weekly chart is positive, but its weekly stochastic reading is just below the overbought threshold of 80.00.
Value levels and risky levels are based upon the last nine weekly, monthly, quarterly, semiannual and annual closes. The first set of levels was based upon the closes on December 31. The original semiannual and annual levels remain in play. The weekly level changes each week; the monthly level was changed at the end of January, February and March. The quarterly level was changed at the end of March. My theory is that nine years of volatility between closes are enough to assume that all possible bullish or bearish events for the stock are factored in.
To capture share price volatility investors should buy on weakness to a value level and reduce holdings on strength to a risky level. A pivot is a value level or risky level that was violated within its time horizon. Pivots act as magnets that have a high probability of being tested again before its time horizon expires.
My choice of using 12x3x3 weekly slow stochastic readings was based upon back-testing many methods of reading share-price momentum with the objective of finding the combination that resulted in the fewest false signals. I did this following the stock market crash of 1987, so I have been happy with the results for more than 30 years. The stochastic reading covers the last 12 weeks of highs, lows and closes for the stock. There is a raw calculation of the differences between the highest high and lowest low versus the closes. These levels are modified to a fast reading and a slow reading and I found that the slow reading worked the best.
The stochastic reading scales between 00.00 and 100.00 with readings above 80.00 considered overbought and readings below 20.00 considered oversold. Recently I noted that stocks tend to peak and decline 10% to 20% and more shortly after a reading rises above 90.00, so I call that an “inflating parabolic bubble” as a bubble always pops. I also call a reading below 10.00 as being “too cheap to ignore.”
“We’ll always be with you. No one’s ever really gone.”
Mark Hamill speaks these words over the new trailer for Star Wars Episode IX: The Rise of Skywalker. It’s a sweet sentiment for those of us who grew up loving the franchise, especially the original trilogy, even as it was becoming a $42 billion merchandising behemoth. The idea that the characters and creatures we loved as kids will never disappear is cozy, like a good bedtime story.
At the same time, it signals a turning point. No longer should we expect to be wowed by a galaxy far, far away – its primary purpose is now to comfort, not thrill. With the launch of Disney+ and the new Star Wars shows and films that will stream with it, The Rise of Skywalker will be, as my colleague Scott Mendelson put it, the last time a Star Wars movie feels like a special event.
And that’s already a stretch.
Under Disney’s watch, the franchise has come to resemble Obi-Wan’s assessment of Darth Vader: more machine than man. Not necessarily evil, but definitely zombie-like. It’s a rather ghoulish drip feed of nostalgia; even after their real-world analogues die, we can’t stop digging these characters up for more screen time. And while that might be great for Disney’s bank accounts, it’s a warning to those who like their Star Wars fresh – or at the very least unbeholden to misogynist, racist fanboys.
J. J. Abrams has at least been open about his desire to recreate the movies he loved as a kid. The Force Awakens was a beat-by-beat retread of A New Hope, rendering it a charming if occasionally nonsensical riff on that galaxy we know and love.
And it worked. Or rather, it sold well, which in Disney’s estimation is the same thing.
To be fair, Disney is a publicly-traded company that controls almost 1/6th of the world’s media, and the Star Wars brand is worth more the GDP of Paraguay. Genuine risks are utterly terrifying at that scale. I struggle trying to judge whether I can wear my jeans one more time before a wash.
It is ultimately us – the fans – who have made Star Wars into what the Disney now regurgitates. They know the faithful will flock to church for the homilies we’ve already heard a hundred times. Familiarity breeds profit before it breeds contempt. (Though contempt is absolutely part of the deal – just ask Kelly Marie Tran).
Fandom – the consumptive, performative identity of brand loyalty – impedes truly fresh content. It no longer belongs to the artist, but to the consumer. Fandom means ownership. It means love. It means safety. It means community. It means money, and compromise of quality.
Fandom means, in today’s climate of franchises and spinoffs, prequels and crossovers, quite simply: too much of a dear thing.
When Rian Johnson’s The Last Jedi took a lightsaber to the tropes Abrams slavishly recreated, the result was uneven but exciting. He convinced me there were still unexplored reaches in that galaxy, stories that could make up for Rogue One’s necromantic conjurings of Peter Cushing and Carrie Fisher.
Johnson gave us the most original, mature spin on the franchise since The Empire Strikes Back – and the fandom shrieked in protest. “How dare you not give me more of what I expect? Who are you to dictate my nostalgia?”
As though they couldn’t simply watch the original films at any time, in any format, on any device.
So Disney brought back Abrams to direct Episode IX: reliable, reverent Abrams, who could never burn the sacred texts no matter how badly they need fumigating.
Cue the trailer for Rise of Skywalker. It features the new characters, like Rey and Poe and Finn, but it’s built around ones that are over 40 years old.
Listen! Luke is doing all the voiceover! Even though he died in the last one! And look! It’s Lando! Remember him? And it’s the Death Star! Again! Can’t go wrong with the Death Star! And since we never came up with a compelling villain this time around, why not just bring back the one who anchored the first six films? The Emperor! Remember that laugh? REMEMBER?
It’s the Star Wars equivalent of a Dane Cook routine: all references to cultural touchstones without any original observations. Even the title is a zombie. We already have a movie about the rise of Skywalker – we have six of the damn things, in fact.
There is an upside here. After the flavorless, vacuum-sealed Solo bombed at the box office, Disney reportedly put its other spin-offs on hold. And they gave Johnson the reins for a new trilogy, one unburdened by legions of squealing hatemongers. Same galaxy far, far away, yes – but new characters and stories, without cameos, CGI ghouls, or “fan-favorites.”
Help us, Rian Johnson; you’re our only hope.
To reference another milked-to-oblivion franchise, you cannot live inside a pensieve. But the newer Star Wars flicks tempt us to do precisely that. In our yearning to revisit the people and places we grew up loving, we’ve entered an addictive downward spiral, one which only approximates magic. We set such a low bar that Disney actually thought people wanted a young Han Solo film, seemingly forgetting that we already have one. (It’s called Star Wars, and it came out in 1977).
And look: I’m not saying that because they came first, the original movies are somehow superior. They had plenty of problems. And the newer ones are populated by a bevvy of delightful actors with terrific chemistry. I am saying that compulsively revisiting the past is more exhumation than exaltation.
And Disney is our number one graverobber.