Written by A.J. Brown

Broad Market Analysis - December 1, 2017


Hi Team. This is A.J. Brown with Trading Trainer on the evening of Friday, December 1, with your Trading Trainer weekend edition of your Daily Insights. What we’re going to do here is take a look at our 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 look at the New York Stock Exchange Composite Index and the VIX Volatility Index. And, because it is the weekend, we are going to take a look at both daily and weekly charts. But before looking at any charts, team, we are actually going to login to the Trading Trainer “Learning Community” web portal by going to login.tradingtrainer.com. And 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 Recommendation sub-tab.

Team, take a look at the recommendations we have for Monday, December 4’s trading session. Slight changes in these recommendations could have major impact on 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-tabs. 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 tabs and its sub-tabs. It will 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, let’s click on the Index Stats sub-tab.

indexstats

Our trading bias remains bullish. Our industrials shown by the Dow Jones Industrial Average fell 0.17% today on light, above average New York Stock Exchange volume, and for this past week it gained 2.86% on heavy, above average New York Stock Exchange weekly volume. Our tech stocks shown by the NASDAQ Composite Index fell 0.38% today on light, above average NASDAQ Exchange volume, and for this past week fell 0.6% on heavy, above average NASDAQ Exchange weekly volume. Our large caps shown by the S&P 500 Index fell 0.2% today and gained for this past week, 1.53%.

Moving on to our secondary indexes. Our 100 best stocks out there shown by the S&P 100 index fell 0.14% today and for this past week gained 1.67%. Our mid caps shown by the S&P 400 Index fell 0.24% today and gained 1.9% for this past week. Our small caps shown by the S&P 600 and the Russell 2000, two different perspectives on small caps, fell 0.6% and 0.47% respectively for today, and for this past week gained 1.08% and 1.18% respectively. Our New York Stock Exchange Composite Index fell 0.1% today and gained 1.55% for this past week. Our VIX Volatility Index gained 1.33% today and a whopping 18.2% for this past week, closing at $11.43. It’s still extremely low but higher than previous. Our gold ETF gained 0.4% today and for this past week fell 0.6%. And our oil ETF gained 1.74% today and for this past week fell 1.02%.

Team, let’s take a look at our Economic Calendar by clicking on the Daily Insights tab and the Economic Calendar sub-tab. First thing I need you to do today, team, is click on the Market Reflections summary. It looks like investors were conflicted between the pending passage of the tax cut bill which Wall Street tends to like so far, and the Michael Flynn drama happening in the Washington, D.C. soap opera.

Then we’ll move to Monday, December 4, and click on the Market Focus Pointers. Also, on Monday December 4, we have the International Perspective report and the Simply Economics report. These reports lay foundations of what happened the previous week and what to expect for the week to come. They are must read weekend reading. Please read them in order to get calibrated for the upcoming week of trading.

calendardec4

Let’s move back to December 1. At 9:45 a.m., the PMI Manufacturing Index was released.

calendardec1

In October, it was 54.6.  In November, it’s 53.9. Still above the boom-bust line at 50 but less than prior. At 10 o’clock, the Institute of Supply Management Manufacturing Index was released. In October it came in at 58.7, in November 58.2. Again, above the boom-bust line at 50 but less than prior. The construction spending numbers were reported at 10:00 a.m. today. Month-over-month, in September, they were up 0.3% percent. In October, they increased 1.4%. Year-over-year, in September, they were up 2%. In October, up 2.9%. Looking forward to next week. Factory orders on Monday, International Trade and the Services Index on Tuesday, and then comes our employment cycle starting on Wednesday with the ADP Employment report and ending Friday with our employment situation numbers. And of course, we have jobless claims and oil reserves throughout the week.

Let’s move on to our watch lists by going to the Trading Tools tab and the Watch List sub-tab. We had three tickers identified by our Option Trading candidate filter today. We will evaluate those for liquidity and patterns, before adding them permanently to our list.

Let’s move on to our Daily Picks by going to Trading Tools and the Daily Picks sub-tab. Here we find our Trading Trainer Daily Picks report generation tool. Let’s do a deeper dive on our indexes by looking at volume and trends.

volumntrends

Volume was very much lower than it was yesterday, very much higher compared to the 50-day, and compared to the 200-day as well. Our oscillator shows that we haven’t had consistently higher volume. Our short duration trends remain bullish. Our long duration trends are also bullish but showing weakening in the small caps and the New York Stock Exchange.

Now, we’re going to apply our template algorithm filters. These filters mathematically go through whatever raw data they are presented with, looking for patterns in the numbers. We’re going to present them with the raw data of the index tickers to give us an idea what the broad market personality is doing, as well as what to look for in our watch list.

Our trend continuation templates are still coming up empty. However, as part of those templates, we see the long-term and mid-term simple moving averages, and they are showing long-term bullish trends.

template1

Taking a look at our trend test templates, our trend reversal test is almost 100% bullish, just a little bit of bearishness in the NASDAQ.

template2

Our short-term trend test has the NASDAQ and the small caps at neutral, all the other indexes at bullish.

template3

That shows me that there’s perhaps a weakening bull trend. Our Bollinger Band Width Index is wide. Our bar counter is lax, meaning that we’ve just popped out of the Bollinger Bands.

Let’s take a look at our charting by going to the Trading Tools tab and our Charting sub-tab. We’re going to start with a Quick Review chart template. This is a six-month, daily chart, with linear scale, open-high-low-close bars, and a separate pane for volume and volume average. And, to that, we want to add our 200, our 50, and our 30 day simple moving averages. These lagging indicators help us determine trend. I’m going to apply these lagging indicators to the Quick Review template here in a user-defined template in my personal profile. I’m going to look at the index tickers via that template, starting specifically with the Dow Jones Industrial Average.

Once this chart loads, team, I’m going to expand it to full screen.

djiadaily

As you can see, the Dow jumped yesterday and today had a little bit of faltering but still ended up. Yesterday was a high volume day. Today, we had similar volume to what we saw on Wednesday. The 200, 50, and 30 are trending up. But, let’s more importantly go to our weekly two-year chart.

djiaweekly

We can see this was an up week, mainly because of what we saw on Thursday, yesterday. Good volume. Not just compared to the holiday week but compared to the weeks before them. Higher highs, higher lows. We have a bull polarity. Back to the six-month daily chart. Again, our simple moving averages are trending up, including our seven day. Let’s move to our five-minute chart.

djia5min

Today, our five-minute chart was a volatile chart but wound up closing just about where we opened after yesterday’s up chart. Let’s take a look at our notes. $24,231.59, that’s well above our resistance level. Our low level is $23,921.90. So we’ll report that as “Closed above resistance” until we get a complete open-high-low-close bar above that level of resistance, we don’t want to mess with that. And everything else remains up, including our higher highs and our higher lows. So we’re back to a full-on Bullish polarity and full-on Bullish trading bias.

Moving to the NASDAQ. Jumping right to our weekly two-year chart, to start.

nasdaqweekly

Continues to trend up. Heavy volume this past week. Not just compared to the holiday week but compared to prior weeks before that. Bullish polarity. Switching to a six-month daily chart.

nasdaqdaily

Our 7 is still above our 30 and our 50. Our 30 is trending up. Our 50 is trending up. Our 200 is trending up. Today was a doji day, not much different than yesterday’s close, heavy volume. Taking a look at our five-minute chart.

nasdaq5min

Quite a volatile day, but again after the dip, closed right back higher. Back to our daily chart. Taking a look at our notes. We closed at $6,847.59. Everything else remains up and bullish. Again, a couple of down days, or doji days, does not make a bear market. This is very bullish.

Let’s move on to the S&P 500 Index. This is the index I feel like most represents our watch list. We’ll go to our two-year weekly chart, to start.

sp500weekly

A very up week on some heavy volume, even compared to the weeks prior to the holiday week. Back to our six-month daily chart.

sp500daily

A doji bar today. We continue with our up bars. The 30, 50, and 200 remain trending up. Our 7 also is trending up. Volume is very high. Let’s take a look at our five-minute chart.

sp5005min

Similar price action to what we saw on the other of the big three. Drops in the late morning session, following we get a recovery throughout the rest of the day. We closed at $2,642.22. Our low was $2,605.52. We’ll keep our “closed above resistance” comment. Everything else stays bullish.

Moving on to our New York Stock Exchange Composite Index. Going to a weekly two-year chart.

nyseweekly

This was a very up week for the New York Stock Exchange, breaking its sideways channel. Back to our six-month daily chart.

nysedaily

Our 7 is up. Our 30 is up. Our 50 is up. Our 200 is up. As you can see here, our price action today was just as tumultuous as the other ones but wound up closing pretty much where it opened. We’ll keep our trading bias as bullish.

What this price action today on all of our big three indexes and our sub-indexes is telling me is that we have some uncertainty and confusion and we’re ready to jump at a moment’s notice, out of fear.

We move to our VIX Volatility Index. We’re looking at the weekly two-year chart.

vixweekly

We’re above our 40-week simple moving average. We close this week slightly higher. We had pulled down that 40-week simple moving average, which we consider the mean, very low. And we actually spiked this week, but we’re ending right at that mean. But again that mean is incredibly low. To have that mean below $12, to even have it below $11.50, is incredible. This 40-week simple moving average is analogous to a 200-day simple moving average. Let’s move to a six-month daily chart and substitute in that 200-day simple moving average, and we can again see how today we had a spike in volatility, bringing us all the way up to $14.58 and then dropping to just about where we opened.

vixdaily

Just a little bit higher than the mean. We closed at $11.43, and that was up 1.33%.

Our overall trading bias still remains bullish.

Our broad market personality is still trending up, and we are overbought. We do have heavy volume, and we have hedging in the derivatives market as shown by the VIX. In summary, we have confusion and uncertainty among investors, ready to spring at a moment’s notice.

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, and the market news including mergers and acquisitions, initial public offerings, public companies going private, and earnings.

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

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