DOW, S&P 500, And NASDAQ Bounce Back

Posted Wednesday, September 9, 2020 by
Shain Vernier • 2 min read

U.S. stocks have come alive today, posting steep intraday uptrends. At the midway point of the Wall Street session, the DJIA DOW (+500), S&P 500 SPX (+75), and NASDAQ (+300) are all deep into the green. Following the market rout of the past four sessions, American equities are showing some resilience.

While no primary market movers were on this morning’s docket, the numbers don’t look half bad:

Event                                                                     Actual               Projected         Previous

MBA Mortgage Applications (Sept. 4)                 2.9%                      NA                  -2.0%

Redbook Index (MoM, Sept. 4)                            -1.0%                      NA                   5.8%

JOLTS Job Openings (July)                                  6.618M                 6.000M              6.001M

Aside from the short-term downtick in the retail sector, these numbers are fairly solid. MBA Mortgage Applications are up and job creation outpaced expectations. All in all, it appears that the COVID-19 economic recovery is gaining steam.

Contrary to most of 2020, the DOW 30 has weathered the latest equities downturn better than the NASDAQ and S&P 500. It once again appears that bargain hunters have stepped in and “bought the dip.”

September E-mini DOW Back Above 28,000

On the daily chart below, it’s apparent just how bad Tuesday’s session was for September E-mini DOW futures. Now, the sentiment has shifted 180 degrees, with the DJIA up more than 500 points.

September E-mini DOW Futures (CL), Daily Chart
September E-mini DOW Futures (CL), Daily Chart

The session after a holiday break is always tricky and yesterday was certainly that for the DOW . However, prices are driving above topside daily resistance and appear poised for a rally. For now, there is one number on my radar:

  •  Resistance(1): 62% Current Wave Retracement, 28,418

Bottom Line: At this point, price is back above the Daily SMA, Bollinger MP, and 38% Current Wave Retracement (27,947, not pictured). If the September DOW closes above these levels, be ready for a test of the 62% Retracement (28,418) in the near future.

Until elected, I’ll have sell orders in the queue from 28,394. With an initial stop loss at 28,456, this trade produces 62 ticks on a standard 1:1 risk vs reward management plan.

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