Written by A.J. Brown

Broad Market Analysis - December 8, 2017

Hi Team. This is A.J. Brown with Trading Trainer on the evening of Friday, December 8, 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 are 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. But before looking at any charts, team, we’re going to login to the Trading Trainer “Learning Community” web portal by going to login.tradingtrainer.com. And of course, once we have 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 11’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 tab 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 our Index Stats.

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Team, our trading bias remains bullish. Our industrials shown by the Dow Jones Industrial Average gained 0.49% today on light, below average New York Stock Exchange volume, and for this past week it gained 0.40% on light, below average New York Stock Exchange weekly volume. The tech stocks shown by the NASDAQ Composite Index gained 0.40% today on light, below average NASDAQ Exchange volume, and for this past week fell 0.11% on light, below average NASDAQ Exchange weekly volume. Our large caps shown by the S&P 500 Index gained 0.55% today and gained 0.35% for this past week.

Moving on to our secondary indexes. Our 100 best stocks out there shown by the S&P 100 gained 0.53% today and 0.40% for this past week. Our mid caps shown by the S&P 400 Index gained 0.39% today and fell 0.20% for this past week. Our small caps shown by the S&P 600 and the Russell 2000, two different perspectives on small caps, edged down 0.05% and edged up 0.09% respectively for today, and fell 0.98% and 0.99% respectively for this past week. The New York Stock Exchange Composite Index gained 0.58% today and gained 0.23% for this past week. Our VIX Volatility Index fell 5.71% today and fell 16.19% for this past week to an incredible low of 9.58. Our gold ETF edged down 0.01% today and fell 2.56% for this past week. And our oil ETF gained 1.41% today and fell 1.54% for this past week.

Team, let’s take a look at our Economic Calendar by going to our Daily Insights tab and our Economic Calendar sub-tab. Team, the first thing I need you to do is read today’s Market Reflections summary, and then let’s fast forward to Monday, December 11, and read our Market Focus Pointers.

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Also, on Monday, December 11, we have our International Perspective and Simply Economics reports. These once-a-week reports give us an idea of what happened the previous week and what to expect for the week to come. These foundational, unbiased reports are worth our read over the weekend.

Back to Friday, December 8.

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The employment situation was released. For October, non-farm payrolls month-over-month change were at 261,000. We revised that October number down to 244,000. For November, it came in at 228,000, higher than expectations. Our unemployment rate in October was at 4.1% and that’s where it stayed for November. Our participation rate was at 62.7% in October and that’s where it stayed for November. Our average hourly earnings month-over-month change in October was flat. That number was revised down to a drop of 0.1%. And then for November, we see a gain of 0.2%. The average hourly earnings year-over-year change in October was up 2.4%. We revised that number to be only up 2.3%, and then the November number shows being up 2.5%. The average work week in October was 34.4 hours. In November, it’s 34.5 hours. Consumer sentiment was reported. Last time we reported 98.5. This time we’re reporting 96.8. And wholesale trade was reported. Inventories, the month-over-month change in September were up 0.3%. We revised that number to be up only 0.1%. And then for October, inventories actually shrunk by 0.5%.

Again, taking a look at next week. Monday we have our job opening and labor turnover survey report. Tuesday and Wednesday we have our Federal Open Market Committee meeting happening, beginning on Tuesday, ending on Wednesday. We have our wholesale and our retail inflation. We have import and export prices. We have our retail sales and our manufacturing numbers. It’s a busy week for economic news.

Let’s take a look at our watch list by going to Trading Tools tab and the Watch List sub-tab. Our Option Trading candidate filter has quite a few tickers that are reaffirming their position on our watch list. They are already there. The ones that are new are highlighted in yellow in both our Covered Call Writing and our Option Trading candidate filter. We will evaluate these new tickers for liquidity and patterns before adding them permanently to our list.

Moving on to our Trading Tools tab and our Daily Picks sub-tab. Here you can find our Trading Trainer Daily Picks report generation tool. We are going to do a deeper dive on our indexes by taking a look at volume and trends.

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Our volume is about the same, slightly lower, compared to Thursday. It is about the same as the 50-day simple moving average, slightly lower. It is about the same as the 200-day simple moving average, and especially on the New York Stock Exchange is lower. The oscillator compared to the oscillator average is lower. Today looks like it was a little bit of a lackadaisical day in the markets. Short duration trends are somewhere between neutral and bearish. Long duration trends are for the most part bullish.

And back this up a notch, let’s invoke our templates. These template algorithm filters 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 is going 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 continuations are showing a little bit of bullishness.

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Our short-term trend test is showing a little bit of uncertainty: Are we bull? Are we bear? Zero days of trend in one direction or the other.

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Our Bollinger Band Width indexes are wide. We’ve got 7’s, 9’s, 10’s. Our bar count is single digits.

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Team, let’s take a look at our charts. We’ll start with our Quick Review template. This is a six-month daily chart, linear scale with open-high-low-close bars and a separate pane for volume and volume average. And to that Quick Review template, I’m going to add the 30, the 50, and the 200 day simple moving averages. These lagging indicators help me determine trend. I’m going to add these lagging indicators to the Quick Review template in a user-defined template found here in my personal profile. I’m going to apply this user-defined template to the indexes, specifically starting out with a Dow Jones Industrial Average.

As soon as this chart loads, team, I’m going to expand it to full screen. And we’ll begin, because it is the weekend, with a weekly two-year chart.

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You can see that we went high again, although it’s not a classic S-bar. It is higher than the previous close. Volume was a little bit less. Still, higher highs, higher lows. We have a weekly bullish bias on the Down Jones Industrial Average. Let’s switch to a six-month daily chart.

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30, 50, 200, all trending up. Today was an up day on lighter volume. Our 7 day continues to trend up and is oriented above the 30 and the 50. Switching over to a five-minute chart.

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Our five-minute chart shows morning gains and then afternoon stall with some bargain buying right in the last few minutes of professional hour. Back to our daily chart. Let’s take a look at some notes. We closed at $24,329.16. All is up. All is bullish.

Moving to the NASDAQ, starting with a weekly two-year chart.

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The NASDAQ was basically a stall this week. Still, one stall week doesn’t make a down market. In fact, it’s well within the ascending channel. Higher highs, higher lows keep us with a bullish polarity on the weekly chart. Switching back to the six-month daily chart.

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Today, we gapped up and slid down during the day. Our 7 is still oriented above the 30 and the 50. Today was a light volume day. Our 200 continues to trend up. Our five-minute chart shows the gap up and then the slow profit-taking throughout the day.

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Back to our daily chart. We closed at $6,840.08. Our low $6,831.61. We’ll have to identify where we have our support and our resistance. It looks like we have resistance at $6,760, and it looks like we have support at $6,900. And with these readjustment here, we’ve got a new boundary condition. Otherwise, everything is up and everything is bullish. Higher highs and higher lows.

Let’s move on to the S&P 500 Index, the index I feel like most represents our watch list. We’ll go to our weekly two-year chart, and we see that this week was a stall week but was still above the previous week.

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Still a bullish polarity. Moving to our six-month daily chart.

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Today we gapped up and continued up. Light volume. 200’s up. 50 day is up. 30 day is up. 7 day is up. Our five-minute chart shows our gap up and some of the gains in the morning session.

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Actually looks just like it was a choppy session. Again in the last 10 minutes of trading, we saw some bargain buying. Back to our daily chart. $2,651.50 was our closing price. Our low is $2,644.10. We’ll go ahead and say, “Closed above resistance.” Yes, yes, yes, yes. Up, up, up. Bullish, bullish.

Our New York Stock Exchange Composite Index has all of our simple moving averages moving up. We’ll start with our weekly two-year chart, where we continue to see upward movement.

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Bullish indeed. Again, back to our six-month daily chart.

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Our 30 is up. Our 50 is up. Our 200 is up. Our trading bias remains bullish.

Taking a look at our VIX Volatility Index, starting with a weekly two-year chart with a 40-week simple moving average.

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We are ending the week clearly below the 40-week simple moving average at all-time lows. Moving to a six-month daily chart with a 200-day simple moving average, which is similar to the 40-week simple moving average, simply because 40 weeks when there are five days per week adds up to 200 days.

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Over the last two days, our implied volatility has dropped as people felt comfortable relinquishing their hedges. Today, we dropped 5.71% to close at 9.58.

Our overall trading bias does remain bullish.

Our broad market personality is trending up. We are overbought. We have been seeing light volume. Confusion and uncertainty among investors.

By the way, next Friday is options expiration day, and so it’s important that if we’re trying to trade any long positions this upcoming week, that we go out to our January options or even further, as there’s no more premium and expiration is looming very close with expiration next Friday. So it’s time to roll out your options and your plans.

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 which there’s a FOMC meeting next week, the monetary policies of China, Europe, and Japan, the price of oil, U.S. economic news including employment, housing, manufacturing, and retail, and of course 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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