Written by A.J. Brown

Broad Market Analysis - August 4, 2107

Hi, team. This is A.J. with Trading Trainer on the morning of Sunday, August 6, 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. Because it is the weekend, we’re going to look at both daily and weekly charts. But, before looking at any charts, team, we’re actually going to log in to the Trading Trainer Learning Community web portal by going to login.tradingtrainer.com.

Once we’ve logged in to the Learning Community web portal, team, I’m going to direct you right to Today’s Daily Insights tab and, further, to the Recommendations sub-tab. Team, take a look at the recommendations we have for tomorrow, which is Monday, August 7’s trading session. Slight changes in these recommendations could have major impact in your trading. You’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 sub-tab. Go ahead and click on that link, and audio is going to start playing [automagically 00:01:11] 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 sub-tab. It’ll make sure you hit all the high points. You can always drill down deeper on your own after the audio’s 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, please click on Index Stats sub tab. Team, our trading bias remains bullish.

indexstats

Our industrials, shown by the Dow Jones Industrial Average, gained 0.3% this past Friday on light below-average New York Stock Exchange volume. It gained 1.2% for this past week on heavy below-average New York Stock Exchange weekly volume. Our tech stocks, shown by the NASDAQ Composite Index, gained 0.18% this past Friday on light mixed-average NASDAQ Exchange volume, and fell 0.36% for the week on flat above-average NASDAQ Exchange weekly volume. Our large caps, shown by the S&P 500 Index, gained 0.19% this past Friday and gained 0.19% for this past week.

Moving on to our secondary indexes, our 100 best stocks out there shown by the S&P 100, gained 0.23% this past Friday and 0.54% for this past week. Our mid caps, shown by the S&P 400 Index, gained 0.24% this past Friday, but fell 0.62% for the week. Our small caps, shown by the S&P 600 and the Russell 2000, two different perspectives on small caps, gained 0.38% and 0.5%, respectively, this past Friday, and fell 1.2% and 1.19%, respectively, for this past week. The New York Stock Exchange Composite Index gained 0.24% this past Friday and 0.25% for the week. Our VIX Volatility Index fell 3.93% this past Friday and fell 2.53% for this past week. Our Gold ETF fell 0.78% this past Friday and 0.86% for this past week. Our oil ETF gained 1.1% this past Friday and fell 0.39% for this past week.

Team, let’s take a look at our Economic Calendar sub tab. Team, the first thing I’m going to have you do is, on Friday, August 4, take a look at the Market Reflections Summary.  Next thing I’m going to have you do is, for Monday, August 7, take a look at the Market Focus Pointers. Then, on Monday, August 7, please take a look at the International Perspective and the Simply Economics once-a-week reports. These reports give us a good foundation for understanding the economic news for the week.

Let’s go back to Friday, August 4.

calendaraug4

The Employment Situation was released. In June, non-farm payrolls were up 222,000. That number was revised this time around to be up 231,000. In July, we rose another 209,000. The unemployment rate in June, 4.4%, in July, 4.3%. The participation rate in June, 62.8%, in July, 62.9%. Average hourly earnings in June were up two-tenths of a percent. In July, up three-tenths percent. The average work week in June, 34.5 hours, the same in July.

Taking a look at International Trade from this past Friday, the trade balance level in May was down $46.5 billion. In other words, it was a $46.5-billion deficit. That was revised this time around to being a little bit less, a $46.4-billion deficit, and in June, a $43.6-billion deficit. That means that the United States has an outflow of this much money for these months.

Looking forward to Monday, August 7, we have our Labor Market Conditions Index, one of my favorite indicators, and also our Consumer Credit.

calendaraug7

Tuesday, we’ve got the Job Opening and Labor Turnover Survey. It looks like we’ve got some pretty healthy economic news being released in the later half of the week as well.

Let’s move on to our Trading Tools tab and our Watch List sub-tab. Team, our Options Trading Candidate Filter identified six different candidates for today. We’re going to evaluate those for liquidity and patterns before adding them permanently to our list.

Moving on to our Trading Tools tab and our Daily Picks report generation sub-tab, we’re going to do a deeper dive on our indexes by taking a look at their volume and trends.

volumeandtrends

Volume was about the same as it was on Thursday, slightly lower than the 50-day, about the same as the 200-day. The oscillator is up, showing that we have extended volume, extended higher volume, showing that volume’s been consistent and strong. The short-duration trends are mixed. The long-duration trends remain bullish.

Taking a look at 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 them 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 list. As you can see here, our trend continuations are… Well, we’ve got long-term trends, but they seem to be stalled.

template1

Our short-term trend test and trend reversal test showing a little bit of bearishness at the same time as bullishness and a lot of neutral, in other words, mixed sentiment.

template2

Our Bollinger Band Width Index does remain on the wide side, with sixes as the minimum and tens as the maximum, the bar count anywhere from a few days to many days.

template3

Right now, the market is just very indecisive… it seems confused… waiting for what will happen next.

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

djiadaily

As you can see here, the Dow continues to march higher. Our 30, our 50, and our 200 are up, but I want to start off with the weekly, two-year chart.

djiaweekly

Two weekly S-bars in a row, volume very healthy. The Dow is clearly on a bullish run. Again, back to our six-month daily chart. Our simple moving averages are all trending up, including the seven.

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

djia5min

Our five-minute chart shows an uptrend, and they’re fairly choppy uptrends, but uptrends nonetheless. Back to our daily six-month chart. We’ll take some notes. The Dow Jones Industrial Average closed at $22,092.81. Our low, $22,024.64. Because we have a complete open high-low close bar outside of our support and resistance channel, we have to adjust. Since we’re dealing with all-time highs, we’ll go with psychological levels of resistance, 22,000 to 22,240. All the other indicators remain bullish.

Let’s move on to the NASDAQ. The NASDAQ, on the other hand, has been in a stall pattern. Let’s move on to our weekly chart, two years worth of data.

nasdaqweekly

On the weekly chart, the NASDAQ clearly shows that it’s in a bull trend, higher highs, higher lows. One stall week, two stall weeks doesn’t mean a stalled market.

Back to our six-month daily chart, higher highs, higher lows. The 30 is up.

nasdaqdaily

The 50 is up. The 200 is up. All the simple moving averages are oriented correctly.

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

nasdaq5min

We can see the sideways chop. Back to our daily, take a look at our notes. We closed at $6,351.56. All the other indications still remain bullish. Again, one week, even two weeks of stalled movement does not make a stalled market.

Take a look at the S&P 500 index, the index that most represents our watch list. We’ll start on a weekly two-year chart.

sp500weekly

Clearly moving up. Again, seeing some stall in just the last week or two, but in the long term we have higher highs, higher lows. The market is clearly moving bullish.

Back to our six-month daily chart, we can see the stall in the most recent bars.

sp500daily

Still, the 30 remains trending up. The 50 is up. The 200 is up. The seven is oriented correctly. The seven has caught up with price. Taking a look now at our five-minute chart, again, you can see the sideways chop.

sp5005min

Back to our daily chart, let’s take some notes. We closed at $2,476.83. Our low was $2,472.08. In this case, we do not have a complete open high-low close bar outside of our support and resistance channel, and so we’ll simply leave this note that says, “Closed above resistance.” All other indications remain bullish.

Let’s move on to the New York Stock Exchange Composite Index. We’ll start with a weekly two-year chart.

nyseweekly

This index continues to trend up.

We’ll now look at the six-month daily chart.

nysedaily

30’s up. 50’s up. Seven has caught up with price, but is still up and oriented correctly. 200 is up. We’ll keep our trading bias at bullish.

Let’s move on to the VIX Volatility Index. We’ll look at a weekly two-year chart with a 40-week simple moving average.

vixweekly

Volatility is clearly below the 40-week mean and at all-time lows. The VIX Volatility Index, often when it is this low, precedes some churn.

Let’s take a look at the six-month daily chart.

vixdaily

We’ll use the 200-day simple moving average, which is analogous to the 40-week simple moving average. There are five days in every week. Again, as you can see, the implied volatility is very low. The VIX is the measurement of the implied volatility on the S&P 500. It was down 3.93% on Friday, closing at $10.03.

Our overall trading bias is bullish. Our broad market personality is in range contraction. Our 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, monetary policies of China, Europe, and Japan, the price of oil, U.S. economic news, including employment, housing, manufacturing, and retail, and 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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