Mr. Tetsuo Inoue　Amundsen and Scott　(RSI Series 2)

Publication date: 2020/07/02 09:37

After passing through the supply-demand (bearish) factors in the second half of June, the US market started July with mixed moves, with the Dow dipping slightly, while the S&P 500 and Nasdaq rose.
As the month changed, trading volume also declined. As expected, yesterday's NYSE volume was 928 million shares, below 1 billion, which is exactly 30% less than June’s monthly average of 1,337 million shares. Also, the VIX, for the second day in a row, had a small intraday high-low range, and its close at 28.62 was the lowest since 6/11. In other words, the June supply-demand factors have subsided, and within the ongoing technical range, quietness has been added to the movement.

So, whether it goes up or down from here, when measured by the technical range, a bottom within the typical trading range should be emerging soon. And the vanguard of that is what I’m currently considering: the RSI I posted yesterday. The Dow last night, and today’s Nikkei average, could signal a tentative bottom. Please recognize that we have entered such timing. Of course, based on past five-signal activation patterns, the statement I wrote two weeks ago that “the Nikkei average will face upside resistance around 23,000 yen until 7/9” is not excluded from the scenario; but we are approaching a time when the upside being heavy is becoming tiresome.

Now, about the US market last night: once again, the news centered on the number of new coronavirus infections and the partial rolling back of economic activity that expanded from 9 states to 16 states. The seven-day moving average of new infections, calculated from yesterday’s reported daily new cases (estimates), reached a record high of 40,879 people.
As I’ve noted before, since the US population is about 2.6 times that of Japan, applying that to Japan would imply about 16,000 new infections per day.

However, there was also some bright news.
Last week the WHO, for the first time, named companies and spoke about progress in vaccine development: “Around 140 pharmaceutical manufacturers worldwide have begun producing vaccines, of which 15 have started clinical trials, and among them, UK AstraZeneca is progressing, and the US Moderna, which had helped lift markets since the end of the prior month, is close to that stage.” (Inoue’s paraphrase of two press conferences by Tedros Adhanom Ghebreyesus and Chief Scientist Soumya Swaminathan)

In response, Brazil and Japan (Prime Minister Abe) quickly approached AstraZeneca and announced that they had secured a large number of doses (said to be about 100 million), but yesterday there was big news from Pfizer in the United States, which was not singled out by the WHO for praise.

The company is progressing with joint vaccine development with a small German pharmaceutical venture that, as mentioned previously, received funding on short notice; it announced that the results of its early-stage clinical trials were very favorable.
In trial participants who received several dosing regimens, those who actually contracted and recovered from COVID-19 had more antibodies in their bodies than those who did not, and because no serious adverse effects were observed, they are considering moving to the next phase—a trial involving up to 30,000 people—possibly within this month. The company is developing four vaccines currently, and this trial data pertains to the most advanced one of them. (To be continued)