It is interesting to note, that on Friday, the 30 Dow stocks declined a total of 57.60 to contribute to the decline in the Dow average of 394.46. A 2.13% decline. The same relative percentages apply to the S and P 500 average also. The decline went on all day, with no real rebounds, and accelerated toward the end of the day, when volume increased dramatically as insiders began to cover their short positions in earnest and also began the process of re-accumulating stock which can then be sold out later at much higher prices. I had mentioned on last Thursday and in previous sessions, that it was most likely that exchange insiders would probably soon conduct a brief, but sharp decline, to cover the short positions held since the “Brexit” advance, and throughout the sideways summer action, where the advance was halted due to the short selling. I saw evidence of this in the Dow 30 components and the major S and P 500 stocks, which I had mentioned in my posts. The Brexit decline, which lasted two days, was on record volume in the S an P. This “necessitated” a rapid and very sharp advance, to unload the stock they acquired at the lows, to investors and traders, who will start buying heavily in , or to the end, of an accelerating advance. Stock was subsequently supplied short by insiders, which also halted the advance and this went on all summer. We are now in the beginning process of short covering and buying for what should ultimately be a new advance to record highs.
This Monday Am, it appears we will probably have a “gap” down open. A common scenario after Fridays decline, would see the market sharply down on high volume after the open and during the first part of trading then a decent rally to follow. Of course this would be for trading purposes, which we will be watching for today. If they decline the market all day today,and on increasing volume, then after that is complete, either today or possibly the next few days, then the advance would be of a more sustained nature. This would be a better scenario for new stock purchases for short and possibly longer term gains. It all depends on how much stock was sold short, during the Brexit advance and in the summer action.
After Fridays action, today and the coming week, and the coming weeks ahead should be quite interesting.