Written by A.J. Brown

Broad Market Analysis - August 11, 2107

Hi team. This is A.J. Brown with Trading Trainer on the morning of Saturday, August 12, with your Trading Trainer weekend edition of your ‘Charts of Interest’ video. What we’re going do here is take a look at the broad market by taking a look at representative indexes of our watch lists, namely the Dow Jones Industrial Average, the NASDAQ Composite Index, and the S&P 500 Index. We’re also going to take a look at the New York Stock Exchange Composite Index and the VIX Volatility Index, and because it is the weekend, we’re going to look at both daily and weekly charts.

Before looking at any charts, team, we’re actually going to log into the Trading Trainer ‘Learning Community’ web portal by going to login.tradingtrainer.com. Of course, once we’ve logged into the ‘Learning Community’ web portal, team, I’m going to direct you right to today’s ‘Daily Insights’ tab and further to the ‘Recommendations’ subtab. Team, take a look at the recommendations we have for Monday, October 14’s trading session. Slight changes in these recommendations could have a major impact on trading. We’re also going to find here a link to our audio commentary. This is the audio where I take you by the hand through today’s daily insights and its subtabs. Go ahead and click on that link. An audio is going to start playing automagically in the background in another browser tab or another browser window, depending on how you have your browser configured. Go ahead and listen to that audio the first time you do click through today’s daily insights and its subtab. It’ll make sure you hit all the high points. You can always drill down deeper on your own after the audio is over. Team, when you listen to the audio commentary, please pay special attention to the opening and closing comments.

In the meantime, for this particular ‘Broad Market Analysis’ of this ‘Chart of Interest’ video series, let’s go right to the ‘Index Stats’ subtab. Team, our trading bias is still bullish.

indexstatsaug11
Our industrials, shown by the Dow Jones Industrial Average, edged up 0.07% yesterday on light, below-average New York Stock Exchange volume. It fell 1.06% for the week on flat, below-average New York Stock Exchange weekly volume. Our tech stocks, shown by the NASDAQ Composite Index, gained 0.64% yesterday, on light, below-average NASDAQ Exchange volume, and fell 1.5% this past week on light, below-average NASDAQ Exchange weekly volume. Our large caps, shown by the S&P 500 Index, gained 0.13% yesterday, and fell 1.43% this past week.

Moving on to our secondary indexes, our 100 best stocks out there, shown by the S&P 100, gained 0.18% yesterday and fell 1.24% for the week. Our mid caps, shown by the S&P 400 Index, gained 0.19% yesterday, fell 2.31% for the week, and our small caps, shown by the S&P 600 and the Russell 2000, two different perspectives on small caps, edged down 0.04% and gaining 0.12% respectively yesterday, and fell 2.76% and 2.69% respectively for the week. New York Stock Exchange Composite Index edged down 0.07% yesterday, fell 1.84% this past week. Our VIX Volatility Index fell 3.3% yesterday, and gained 54.64% for the week. Our gold ETF gained 0.47% yesterday, and gained 2.62% for the week. Our oil ETF gained 0.81% yesterday and fell 1.38% for the week.

Team, let’s take a look at our economic calendar. Team, first thing I’d like you to do is take a look at Friday, August 11’s ‘Market Reflections’ summary.

calendaraug11

Then I’d like you to take a look at Monday, August 14’s ‘Market Focus’ pointers.

calendaraug14

Then let’s take a look at the once a week reports on Monday, August 14, namely the ‘International Perspective’ and ‘Simply Economics’ reports. These reports come once a week and lay a great foundation for us understanding the previous week and the week to come’s economic news and more.

Back to August 11. The Consumer Price Index in June, month over month, was flat. In July, it was up 0.1%, below expectations. Year over year, in June it was up 1.6%, in July 1.7%, below expectations. When you factor out the volatile food and energy, month over month, in June, up 0.1%, in July, up 0.1%, below expectations. Year over year, in June, the Consumer Price Index less food and energy up 1.7%, in July up 1.7%, below expectation.

As far as economic news scheduled for Monday, August 14, not much happening. Friday, August 18 is options expirations day, so if you have any sort of plans you have for opening new positions, this is the weekend to consider rolling those out to September options.

Team, let’s take a look at our watch list by going to our ‘Trading Tools’ tab and our ‘Watch List’ subtab. One ticker was identified by our option trading candidate filter. We’re going to evaluate that ticker for liquidity and patterns before adding it permanently to our list. Now we’re going to take a look at our ‘Daily Picks’ report generation tool. We’re going to take our index tickers, and we’re going to do a deeper dive on volume and trends.

volumetrendsaug11

Volume was lower, very much lower on the NASDAQ than it was this past Thursday, August 10, and slightly lower than the 50-day, AND slightly lower than the 200-day volume average. The oscillator is showing consistently high volume over the last days. Short-duration trends are almost unanimously bearish. Long-duration trends are bullish only in the big three and the 100 best stocks out there. The New York Stock Exchange, the mid caps, and the small caps have gone to neutral.

Backing this up, let’s take our template algorithm filters. These mathematically go through whatever raw data they’re presented with, looking for patterns in the numbers. We’re going to present it with the raw data of our index tickers. That’s going to give us an idea of what the broad market personality is doing as well as what to look for on our watch list. Triggered longs on the Reactive and the Chaiken, plenty of long-term trend.

template1aug11

Triggered long means we’ve been pulling back to see if we get a trend continuation pattern.

You can see that pullback in the short-term trend template and the trend reversal template as well, clearly pulling back.

template2aug111

The question is, are we going to start seeing multiple cycles of range contraction following by range expansion in a bearish direction? It looks like we have dropped down below our lower Bollinger bands.

template3aug11

Team, let’s take a look at our charts. We’ll go to the ‘Trading Tools’ tab and the ‘Charting’ subtab. We’ll take a look starting with a ‘Quick Review’ template.  This is a six-month, daily chart, linear scale, open high-low close bars, separate pane for volume and volume average. I’m going to add to that our 30, 50, and 200-day simple moving averages. These lagging indicators help me determine trend. I have these lagging indicators applied to the quick review template in a user-defined template here on my personal profile. I’m going to apply that to the indexes, specifically the Dow Jones Industrial Average to start. As soon as it loads, team, I’m going to expand it to full screen.

djiadailyaug11

30 is up, 50 is up, 200 is up. Price has been up, and then it pulled back, extremely so, on Thursday. Volume was high on Thursday. Let’s take a look at our weekly, two-year chart.

djiaweeklyaug11

Again, our weekly, two-year chart, we had very much a Z bar this past week. The Z bar was on very light, what I call summer doldrums, volume. Even though we had a Z bar, we’re still at the top of our scale. Let’s cycle back to a six-month, daily chart. Again, Thursday was very much a down day. Our seven-day simple moving average is still oriented correctly, as are the others. Let’s take a look at a five-minute chart.

djia5minaug11

Our five-minute chart is showing perhaps a trend reversal type pattern back on August 8. August 10, Thursday, we can see the price dropped. For the most part, though, we’ve been getting just sideways, either sideways calm or sideways choppy. We could be seeing a top. We won’t know that for sure until we’re a few more days past. We closed at $21,858.32. Our high, $21,911.09. Because we have a complete open high-low close bar below support, we need to scale back our support and resistance lines. We pull back to resistance being $22,000 and support being $21,750. Otherwise, everything else remains on the bullish. Again, a couple of down days does not make a down market.

Let’s take a look at the NASDAQ. The NASDAQ was somewhat in a range contraction phase, pulled back but already started to recover today. Let’s take a look at our weekly, two-year.

nasdaqweeklyaug11

You can see the Z bar, but again, it isn’t out of our ascending channel, and volume shows that of a summer doldrums. Six-month, daily chart.

nasdaqdailyaug11

The 30 and 50 look to be flat. The seven is still oriented correctly. The 200 remains trending up. Let’s see here. Higher high, higher low.

Take a look at our five-minute chart.

nasdaq5minaug11

Sideways today. Thursday was a down day. Wednesday was sideways, and Tuesday looks like that reversal day, very similar to the Dow. NASDAQ, $6,256.56. Our high, $6,266.89. Again, we need to roll this back two notches, not just one. This is going from a high of $6,400 and now going to $6,300. We can actually look at our chart here and look at the lines of support and resistance. It looks like we’ve got our line of support at $6,150, and our level of resistance is up here. Perhaps it’s $6,270.

Let’s actually do that same thing for the Dow. I think we’re going to have to use our psychological levels for the Dow. $22,125 might be our level of resistance. Our level of support will probably come down around right about here, $21,575.

Now let’s take a look at the S&P 500 Index. This is the index I feel like most represents our watch list. We’ve got our weekly, two-year to start.

sp500weeklyaug11

Big Z bar, light volume, still inside channel, just going from top of channel to bottom, a very tight channel for that matter.

Back to six-month, daily chart.

sp500dailyaug11

30 and 50 do look like they’ve recently flattened. 200 is up. We’ll come take a look at our five-minute chart, or shall we look at the seven-day? Seven-day is still oriented correctly.

Switching over to our five-minute chart, you can see that Thursday’s price action was down, yesterday’s price action flat, Wednesday’s flat. Tuesday’s, similar to the Dow and the NASDAQ, looks like perhaps the reversal day.

sp5005minaug11

Looking at our 200, still trending up. We wound up closing at $2,441.32 Our high is $2,448.09. Our support looks like it’s around $2,425, and our support is up here at $2,475.

Then moving on to the New York Stock Exchange Composite Index, weekly, two-year chart shows a big pullback, but again, trend is still present, just at the bottom instead of the top of the trend.

nyseweeklyaug11

Going on back to our six-month, daily chart, 30 has flattened out, but otherwise all simple moving averages are oriented correctly. We’re going to keep a bullish trading bias.

nysedailyaug11

Finally, the VIX. We’ll go to a weekly, two-year chart with 40-week simple moving average.

vixweeklyaug11

Implied volatility jumped this week, but still actually on the low side. We’re above our 40-week, but the 40-week has been pulled down to dangerously low levels, and we’re just playing around in a level that we saw back, it looks like, in April.

Six-month, daily chart popped up largely on Thursday, started to retrace already. Six-month, daily chart, looking at 200-day simple moving average, our VIX volatility index down 3.3% to $15.51. It opened at $16.17.

vixdailyaug11

Our overall trading bias, team, is bullish. Our broad market personality is transient external stochastic shock-breakout down. Market is responding to the following, including but not limited to transient external stochastic shocks, U.S. fiscal policy or U.S. Federal Reserve monetary policies, monetary policies of China, Europe, and Japan, price of oil, U.S. economic news, unemployment, housing, manufacturing, retail, market news, mergers, acquisitions, initial public offerings, public companies going private, and earnings. Roll out your options if you’re going to be long in your plans for opening new positions, and transient external stochastic shocks. If we stop making threats back and forth across the big pond in the Pacific, things will calm down, go back to normal. We’ll see. That’s all I’ve got, team. Please take care.

Leave a Reply




Video: Covered Call Writing  

Learn How to Write Covered Calls

In this series of 6 videos, I show you how to execute my covered call writing strategy from start to finish. Watch the first video instantly when you click for more information. Click for more »