Written by A.J. Brown

Broad Market Analysis - August 25, 2017

Hi team. This is A.J. with Trading Trainer on the evening of Friday, August 25 with your Trading Trainer weekend edition of your ‘Daily Insights’. What we’re going to do here is take a look at the broad market by taking a look at representative indexes of our watch list, 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, August 25’s trading session. Slight changes in these recommendations could have major impact on your 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 subtabs. 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 close attention to the opening and closing comments.

In the meantime, for this particular ‘Broad Market Analysis’ of this ‘Charts of Interest’ video series, please, let’s click on ‘Index Stats’ subtab.

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Our trading bias is neutral bullish. Our industrials, shown by the Dow Jones Industrial Average, gained 0.14% on light, below-average New York Stock Exchange volume. For the week, the Dow Jones Industrial Average gained 0.64% on light, below-average New York Stock Exchange weekly volume. The tech stocks, shown by the NASDAQ Composite Index, edged down 0.09% today on light, below-average NASDAQ Exchange volume, and gained 0.79% for the week on light, below-average NASDAQ Exchange weekly volume. Our large caps, shown by the S&P 500 Index, gained 0.17% today, and gained 0.72% for the week.

Now, moving on to our secondary indexes. Our 100 best stocks out there, shown by the S&P 100, gained 0.12% today, 0.61% for the week. Our mid caps, shown by the S&P 400 Index, gained 0.44% today, 0.99% for the week. Our small caps, shown by the S&P 600 and the Russell 2000, two different perspectives on small caps, gaining 0.45% and 0.26% respectively for today, and gaining 1.13% and 1.45% respectively for the week. Our New York Stock Exchange Composite Index gaining 0.33% today, 0.97% for the week. Our VIX Volatility Index fell 7.77% today, 20.9% for the week. Our gold ETF gained 0.37% today, 0.36% for the week. Our oil ETF gained 0.41% today, falling 2.21% for the week.

Team, let’s take a look at our economic calendar. We’ll go to the ‘Daily Insights’ tab and the ‘Economic Calendar’ subtab. The first thing I’m going to have you do, team, is read today’s ‘Market Reflection’ summary. Then, fast forward to Monday, August 28 and read the ‘Market Focus’ pointers. Also, on Monday, August 28, read the once-a-week ‘International Perspective’ and ‘Simply Economics’ reports. These reports lay a foundation for what happened the previous week and what’s coming up for the week to come.

Back to today, Friday, August 25, the durable goods orders for June showed that new orders, month over month were up 6.5%.

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We revised that number this time around to be 6.4% and in July, we see it actually dropped 6.8%. Year over year, in June, new orders were up 16.1%. We revised that number to be 16.3%, and in July, we’re showing an increase of only 4.2% year over year. Factoring out transportation, month over month in June, we were up 0.2%. We revised that number this time to be up only at 0.1%. For July, we’re reporting it was up 0.5%. Minus transportation year over year, in June, it was 6.8%, revised this time to be up 6.9% and in July, up 5.6%. Core capital goods, month over month change, edging down 1% in June, revised this time to be flat, up 0.4% in July. Year over year, in June, 5.6% for the core capital goods revised to be 5.8% this time, and in July, up 3.5%.

Looking to next week, on Monday, we have the International Trade in Goods report before the market even opens and the Dallas region manufacturing.

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We have home prices on Tuesday along with the conference board’s consumer confidence and then we have employment numbers for the later half of the week.

Let’s take a look at our ‘Trading Tools’ tab and our ‘Watch List’ subtab. Three tickers have been identified by our Option Trading candidate filter. We’re going to evaluate these for liquidity and patterns before adding them permanently to our Watch List.

Taking a look at our ‘Trading Tools’ tab and our ‘Daily Picks’ report generation subtab, we’re going to go ahead and take a deeper dive using our volume and trends applied to the indexes.

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Volume was about the same, slightly lower today compared to Thursday, definitely lower than the 50-day volume simple moving average, definitely lower than the 200-day volume simple moving average. And the oscillator shows that we haven’t had consistent volume over the past days. Our short duration trends are neutral and for the most part, our long duration trends are neutral now as well.

Taking a look at our template algorithm filters, these mathematically go through whatever raw data they are presented with, looking for patterns in the numbers. We’re going to present it with the raw data of the index tickers, that’s going to give us an idea what the broad market personality is doing as well as what to look for in our watch lists.

As you can see here, trend continuations are almost not even proliferating.

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Our short-term trend test for the most part is just a bunch of neutral, maybe one day of some uptrends…

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and our bar count is in the single digits.

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Our Bollinger Band Width Index is in the 8’s, 9’s and 10’s for the most part. For the most part, the market seems to be going sideways.

Let’s take a look at our ‘Trading Tools’ tab and our ‘Charting’ subtab. We’ll start with a ‘Quick Review’ template which is a six-month, daily chart, linear scale, open high-low close bar, separate pane for volume and volume average. We’ll apply to that the 200, the 50 and the 30-day simple moving averages. These lagging indicators help me determine trend. I have here a user-defined template where I’ve added those simple moving averages to my ‘Quick Review’ template, here in my personal profile. I’m going to apply that template to the indexes specifically starting with the Dow Jones Industrial Average. Once the chart loads, I’m going to expand it to full screen.

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The seven-day simple moving average has crossed down below the 30-day simple moving average. The 200-day simple moving average is still trending up. Our 50-day is trending up. Our 30-day is trending up. But more importantly, let’s move to a weekly, two-year chart.

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Team, we have an S bar after having two Z bars. Our polarity is still bullish, higher highs, higher lows. The most recent bars have been losing volume validation. Let’s move back to our six-month, daily chart. We have lower lows and lower highs. Our polarity is bearish. Let’s take a look at our five-minute chart.

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Our five-minute chart shows a lot of sideways chop. Mostly some high volatility moves during amateur hour and some sell off, bargain taking, during professional hour. Back to our daily chart, let’s take a look at our notes. We closed at $21,813.67. Our seven is below the 30, but still above the 50, and the 30 is above the 50 and the 50 is above the 200. All trends 30, 50 and 200 are pointing up. The weekly polarity remains bullish. The daily polarity remains bearish. We’ll keep our neutral- bullish trading bias, as we can see, we’re clearly in a downtrend.

Let’s move to the NASDAQ Composite Index. We’ll start with our weekly, two-year chart.

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Again, an S bar following two Z bars still higher highs and higher lows. This week’s volume is anything but validating.

Let’s move to our six-month, daily chart.

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The 30 and the 50 remain flat. Our seven has crossed down below both. Our 200 remains trending up. It looks like we are in a descending channel but perhaps in the last four days, in a consolidation.

Let’s take a look at our five-minute chart.

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Our five-minute chart shows sideways chop, again a very volatile amateur hour and a sell-off or profit-taking during professional hour. Taking a look at our notes, we closed at $6,265.64. The seven is below the 30 and the 50, our 30 remains above the 50, and our 50 remains above the 200. The 30 and 50 are flat, the 200 is trending up. The weekly polarity is bullish. The daily polarity is bearish. There is a down trend and even some consolidation will keep a neutral bullish trading bias.

Let’s take a look at the S&P 500 Index, the index I feel like most represents our watch list. Starting with a weekly, two-year chart, two Z bars and an S bar.

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Still higher highs, higher lows, volume is invalidating as each week continues.

Going back to the six-month, daily chart, clear downtrend but also the consolidation over the last four days.

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The 30 and the 50 remain flat, the 200 trending up. The seven crossing down below the 30 and the 50.

Our five-minute chart shows choppy price action.

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Again, a lot of volatility during amateur hour and then profit taking during professional hour. Back to our daily chart. Let’s take some notes. $2,443.05. Again, the seven is below the 30 and the 50. The 30 and the 50 remain flat. The 30 is still above the 50. The 50 is still above the 200. The 200 is trending up. Our weekly polarity is bullish. Our daily polarity is bearish. Our trading bias is neutral-bullish as we’re in a downtrend and we have most recently, some consolidation.

Taking a look at the New York Stock Exchange Composite Index, going to the weekly, two-year chart.

nyseweeklyaug25

An S bar following two Z bars, higher highs, higher lows, a bullish polarity.

Moving to our six-month, daily chart, you can see the downtrend although it looks as though we have a complete open high-low close bar above resistance.

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Our 30 is flat. Our 50 is flat. Our seven is trending down, and below both the 30 and the 50. Our 200 trends up. Despite the bars being above resistance on the descending channel, we’re going to keep a neutral bullish trading bias.

We’ll go to the VIX Volatility Index stopping first at the two-year, weekly chart with a 40-week simple moving average.

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We can see today, we closed below that 40-week simple moving average, which is a mean for us. The 40-week simple moving average is analogous to the 200-day simple moving average which we’ll look at now on a six-month, daily chart.

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Indeed, we closed below the mean. Taking a look at our notes, we’re down 7.77% today which brings us down to $11.28. That’s incredibly low.

Our overall trading bias remains neutral-bullish. Our broad market personality, we’re in a downward channel.

The market is responding to the following, including but not limited to transient external stochastic shocks, the U.S. fiscal policy, the U.S. Federal Reserve monetary policy, the monetary policies of China, Europe and Japan, the price of oil, U.S. economic news including employment, housing, manufacturing and retail; the market news including mergers, acquisitions, initial public offerings, public companies going private, and earnings.

That’s all I’ve got, team. Please take care.

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