Written by A.J. Brown

Broad Market Analysis - July 28, 2017


Hi, team. This is A.J. Brown with Trading Trainer, on the evening of Friday, July 28th, 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 out 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 our secondary indexes, namely 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 login to the Trading Trainer “Learning Community” web portal by going to login.tradingtraining.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” sub-tab. Team, take a look at the recommendations we have for Monday, July 31st’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 an 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 auto-magically 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 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, please click on the “Index Stats” sub-tab.

Our trading bias does remain bullish.

indexstats2

Our industrials, shown by the Dow Jones Industrial Average, gained 0.15% today on light, below-average New York Stock Exchange volume. For the week, it gained 1.16% on light, below-average New York Stock Exchange weekly volume. Our tech stock, shown by the NASDAQ Composite index, fell 0.12% on light, below-average NASDAQ exchange volume. It fell 0.2% for the week, on heavy, mixed-average NASDAQ exchange weekly volume. Our large caps, shown by the S&P 500 index, fell 0.13% today. It edged down 0.02% for the week.

Moving onto our secondary indexes. Our 100 best stocks out there, shown by the S&P 100, fell 0.25% today and gained 0.16% for the week. Our mid caps, shown by the S&P 400 index, fell 0.49% today, 0.65% for the week. Our small caps, shown by the S&P 600 and the Russell 2000, two different perspectives on small caps, fell 0.19% and 0.3% respectively for today, and fell 0.37% and 0.45% respectively for the week. Our New York Stock Exchange Composite index edged down 0.07% today, and gained 0.26% for the week. Our VIX Volatility index gained 1.78% today, and gained 9.94% for the week. Our Gold ETF gained 0.75% today, 1.2% for the week. Our Oil ETF gained 1.09%, 8.89% for the week.

Team, let’s take a look at our economic calendar, by going to the “Daily Insights” tab and the “Economic Calendar” sub-tab.  Team, the first thing I’d like you to do is read the “Market Reflections” summary from today, July 28,

calendarjul28

and then read the “Market Focus” pointers for Monday, July 31.

calendarjul31

Also, please read the “International Perspective” and “Simply Economics” once-a-week reports, found on the Monday, July 31 column. These once-a-week reports give us a strong foundation to understand the economic news, both domestically and internationally, both over this past week and for the week to come.

Back to Friday, July 28. At 8:30 AM, the Gross Domestic Product was released.  Real Gross Domestic Product, quarter-over-quarter change, seasonally adjusted annual rate… the prior reading was 1.4%. We revised that prior reading to be 1.2%. The new reading is 2.6%. The GDP Price Index quarter-over-quarter change, seasonally adjusted annual rate… the prior reading is 1.9%, updated this time around to be 2%. Then, for this time around, the most recent reading is only 1%. The real consumer spending, quarter-over-quarter change, seasonally adjusted annual rate is 1.1% for the prior reading. We updated it to be 1.9%. For this reading it is 2.8%. Our Employment Cost Index, quarter-over-quarter change… the prior reading was 0.8%, the current reading only 0.5% percent. Year-over-year, the prior reading was 2.4%, and that’s where it stayed for this reading. Consumer Sentiment, the final numbers for the month… 93.1% was the prior reading, 93.4% is the current reading.

Moving on to preview what’s coming up for next week. We’ve got some housing numbers, we’ve got some more regional manufacturing reports, we’ve got our retail sales, factory orders, and we’ve got our employment situation on Friday. It is going to be an economic news heavy week.

Team, let’s take a look at our “Trading Tools” tab and our “Watch List” sub-tab. We have two tickers identified by our Option Trading Candidate filter. We will evaluate those for liquidity and patterns before adding them permanently to our list. Going to our “Trading Tools” and our “Daily Picks” report generation tool sub-tab, we’re going to take our index tickers and do a deep-dive by taking a look at volume and trends.

volumeandtrends2

The volume today was average compared to yesterday, and compared to the volume Simple Moving Averages. The short duration trends are balancing between bullish, bearish, and neutral. Kind of a limbo state. The long duration trends remain bullish.

Backing this up, 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 the 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 in our watch list. It looks like our Reactive, Buffered, and Chaiken templates are pretty much neutral.

template12

Our Short-Term Trend test looks a little bit uncertain.

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Our Trend Reversal test actually looks the same.

template32

We are starting to accumulate bar counts inside of our Bollinger bands. Our Bollinger Bands are a little bit on the wide side. Perhaps we’re in a range contraction or starting some more channeling through these summer doldrums months.

Let’s go to our “Trading Tools” tab, and our “Charting” sub-tab. Let’s take a look at our “Quick Review” template chart. This is a six-month, daily chart, linear scale, open-high-low-close bar, and a separate pane for volume and volume average. We’re going to add to that our 30, 50 and our 200 day Simple Moving Averages. These lagging indicators help me determine the trend of the market. I have these indicators added to the “Quick Review” template, built into a user defined template here in my personal profile. I’m going to apply that to the indexes, specifically starting with the Dow Jones Industrial Average.

djiadaily2

Once this chart loads, team, I’m going to expand it to full screen. As you can see here on the Dow Jones Industrial Average, the 30, 50, and 200 day Simple Moving Averages remain trending up.

Before going any further, let’s switch to our weekly, two-year chart.

djiaweekly2

The 30 week, 50 week, and the 200 week Simple Moving Averages remain trending up. We had an up week on some nice volume. Higher highs, higher lows, the polarity remains bullish. Rolling back to our six month, daily chart, again the 30, 50 and 200 day are trending up. We have a handful of up days following each other. Our 7 day, Simple Moving Average remains trending up, lagging price.

Taking a look at our five minute chart, today was a nice gentle up-trending day on the Dow Jones Industrial average.

djia5minute

Back to our daily chart. Let’s go ahead and take some notes. We closed at $21,830.31. Our low was $21,756.12. So, it’s time for us to adjust our support and resistance lines. We have a complete open-high-low-close bar above resistance. Support now becomes $21,750, and, if you can believe it, resistance becomes $22,000. The seven is above the 30, the seven is above the 50, the 30 is above the 50, the 50 is above the 200. This means that all of our Simple Moving Averages are oriented for an up trend, and the 30, 50 and 200 day Simple Moving Averages are also all trending up. Our polarities are both bullish for the weekly and daily, our trading bias is bullish.

Let’s move onto the NASDAQ. We’ll start off with a weekly, two year chart.

nasdaqweekly2

This week was a stall week for the NASDAQ on some heavy volume. We do have a higher high after a higher low. The weekly polarity is bullish.

Rolling into a six month, daily chart, we had a falter day on Thursday, Friday a recovery day.

nasdaqdaily2

Our 30, our 50 and our 7 are all up, and they’re oriented correctly for a bull trend.  The 200 day is up.

Five minute chart shows that today was a gentle up trend after yesterday’s very volatile sell off.

nasdaq5minute

Back to our daily chart. Let’s take some notes. We closed at $6,374.68, all of our Simple Moving Averages are oriented correctly and trending up. We’ve still got a higher high, and we could actually now have an established higher low. Let’s go ahead and change our daily polarity to full on bullish, and our trading bias to bullish.

Moving onto the S&P 500 index. Starting with a weekly, two year chart…

sp500weekly2

a stall week for the S&P 500 on heavy volume. Still, weekly polarity is bullish. We’re trending up.

Let’s roll into a six month, daily chart.

sp500daily2

Trends are pointing up, including the seven day simple moving average.

Taking a look at our five minute chart, today was a gentle up trend after yesterday’s upset day.

sp5005min2

The S&P 500 closed at $2,472.10. All simple moving averages are oriented correctly for a bull trend, and they’re all trending up. Our polarities are bullish, both weekly and daily. Our trading bias is bullish.

Taking a look at the New York Stock Exchange Composite index, looking at a weekly two year chart…

nyseweekly2

it seems all bullish.

Moving onto a six month, daily chart, our 200, 50, 30 and seven day simple moving averages are all trending up, our trading bias is bullish.

nysedaily2

Moving onto the VIX Volatility index, going out to the weekly, two year chart…

vixweekly2

and looking at only the 40 week simple moving average. Why the 40 week simple moving average?

Because it’s analogous to the 200 day simple moving average that we look at on the daily chart.

vixdaily2

As you know, five trading days in a week multiplied by 40 weeks, is 200 days. You can see that the implied volatility stalled this week, still incredibly low. Moving to a six month, daily chart, and bringing in the 200 day simple moving average, you can see that implied volatility popped yesterday, but then already started to drop today. The VIX is up 1.78%, bringing us to $10.29 per VIX share.

Our overall trading bias still remains bullish. Our broad market personality does seem to be in range contraction.

The market is responding to the following, including but not limited to: Transient External Stochastic Shocks, US Fiscal Policy, US Federal Reserve Monetary Policy, Monetary Polices of China, Europe and Japan, the Price of Oil, US Economic News, employment, housing, manufacturing and retail, and of course, Market News of 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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