Written by A.J. Brown

Broad Market Analysis - June 16, 2017

Hi team. This is A.J. with Trading Trainer on the morning of Sunday, June 18 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 watchlists, namely the Dow Jones Industrial Average, the Nasdaq Composite index, and the S&P 500 index. We’ll also 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 into the Trading Trainer learning community web portal by going to login.tradingtrainer.com.

Once we’ve logged into the learning community web portal, team, I’m going to direct you right to today’s “Daily Insights” tab, further to the “Recommendations” sub-tab. Team, take a look at the recommendations we have for tomorrow, which is Monday, June 19’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 it’s sub-tab. 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 sub-tabs. 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 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 go right to “Index Stats”.

indexstats2

Our trading bias remains at bullish. Our industrials, shown by the Dow Jones Industrial Average gained 0.11% on heavy, above average New York Stock Exchange volume. It gained 0.53% for the week on heavy, above average New York Stock Exchange weekly volume. Tech stock shown by the Nasdaq Composite index fell 0.22% this past Friday on heavy, above average Nasdaq exchange volume; fell 0.9% for this past week on light, above average Nasdaq exchange weekly volume. Large cap shown by the S&P 500 index edged up 0.03% this past Friday; edged up 0.06% for the week.

Moving on to our secondary indexes. Our 100 best stocks out there shown by the S&P 100 edged up 0.02% this past Friday; was flat for this past week. Mid caps shown by the S&P 400 index edged up 0.01% this past Friday; fell 0.23% this past week. Small cap shown by the S&P 600 and the Russell 2000, two different perspectives on small caps, falling a 0.5% and 0.24% this past week Friday respectively; falling 1.32% and 1.05% respectively for this past week. The New York Stock Exchange Composite index gained 0.27% this past Friday; 0.23% for this past week. Vix Volatility index falling 4.77% this past Friday; falling 2.99% for this past week. Our gold ETF edging up 0.02% this past Friday; falling 1% this past week. Our Oil ETF gaining 0.65% this past Friday; down 2.63% for this past week.

Team, let’s take a look at our economic calendar. We’ll go to “Daily Insights” and then the “Economic Calendar” sub-tab. Taking a look at Friday, June 16, the quadruple witching day.

calendarjun16

First thing I need you to do is take a look at the Market Reflection summary. Now look at Monday, June 19.

calendarjun19

I want you to take a look at the Market Focus pointers. I’d also like you to take a look at the International Perspective report, and the Simply Economics report. These two reports are weekly reports that are worth you checking out.

Back to Friday, June 16. Housing starts for April; the seasonally adjusted annual rate for starts was at 1.172 million. We revised that number down this time around to 1.156 million. For May, we’re reporting 1.092 million. Then for Permits, the seasonally adjusted annual rate for April was 1.229 million; revised down ever so slightly to 1.228 million. For May, we’ve got 1.168 million.

Taking a look at our Consumer Sentiment mid-month numbers; prior sentiment index was at 97.1. This time around, 94.5. Monday looks like it will be a very quiet day. In fact, it looks like it’s going to be a quiet week until the last half of the week where we’re going to have housing data like existing home sales, new home sales, and home price index reports.

Going to our “Trading Tools” tab and our “Watch Lists” sub-tab. No tickers were identified by our covered call writing or option trading candidate filters. Going to our “Daily Picks” report generation tool, we’re going to take a deep dive on the indexes by looking at the Volume and Trends report. Volume was very high on both exchanges because of quadruple witching, no doubt. Trends for the most part neutral.

volumeandtrends2

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 our 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.

template1

No activity for trend continuations. Somewhat bearish for our short term trend test, but only a few daily bars in.

template2

For the most part, it looks like we are channeling. Bollinger Band Width indexes are at eights, some sevens, some sixes, a nine. The bar count in many cases is over 20 bars long. 20 daily bars equals one month.

template3

Taking a look at our charting by going to our “Trading Tools” tab and our “Charting” sub-tab; “Quick Review” template is a six month, daily chart, linear scale, open-high-low-close bar, separate pane for volume and volume average. I apply the 200, the 50, and the 30 day simple moving averages. These lagging indicators help me to determine trend. I have them built into a user defined template here in my personal profile. I’m going to apply them to the indexes, specifically starting out with the Dow Jones Industrial Average. As soon as this loads I’m going to expand it to full screen.

Okay, we’ll first start by going to “Weekly” and “Two Year”.

djia-weekly2

We continue to climb and you can see the weekly volume taking a spike because of quadruple witching. Quadruple witching is where we have not only options but also single stock futures, index options, and index futures all expiring on the same day. Quadruple witching only happens four times per year.

Switching to our “Six Month” daily chart, the 30, the 50, and the 200 are pointing up.

djia-daily2

The seven is pointing up. Again, you can see the spike on Friday for the quadruple witching.

Breaking it down to a “Five Minute” chart, you can see Friday was a choppy day ultimately ending up.

djia-5min2

Back to our “Daily” chart; let’s take some notes. We closed at $21,384.28. Our seven, our 30, and our 50 remained trending up and they’re all oriented correctly. Bullish trading bias.

Let’s take a look at the Nasdaq Exchange. We’ll start with our “Weekly” and “Two Year” chart.

nasdaq-weekly2

The Nasdaq has faltered over the last two weeks; however this past week we wound up with a Doji bar, and this Doji bar hints that we have already found a bottom on the Nasdaq.

The polarity remains bullish. “Six Month” and “Daily” chart.

nasdaq-daily2

We almost see a double bottom being formed. We did create a bearish polarity. Still the simple moving averages are oriented correctly, and the 30, 50, and 200 are trending up.

The “Five Minute” chart shows that on Thursday possibly a bottom was found; Friday we saw little price action.

nasdaq-5min2

It’s somewhat corroborated what we saw on Thursday. Back to our “Daily” chart. We closed at $6,151.76, and everything still seems unchanged with our bias set to bullish.

Moving on to the S&P 500 Index. The S&P 500 Index is the index I feel like most represents our watch list. We’ll start on a “Weekly” and “Two Year” chart.

sp500-weekly2

Trending up, 30, 50, 200. Good volume. Most likely on quadruple witching.

Switching to our “Six Month” and “Daily” chart, 30, 50, 200 still trending up.

sp500-daily2

With respect to price action, it looks like we’ve stalled going sideways. Taking a look at our seven day simple moving average, still going sideways. It looks like we still have a higher low. We had a higher low, a higher high, another higher low. Our polarity remains bullish.

Going to our “Five Minute” chart.

sp500-5min2

Again it looks like Thursday identified a bottom. Friday was more subdued trading, but still following on Thursday’s lead. Back to our “Daily” chart and we’ll take some notes. $2,433.15 and everything remains the same with our trading bias at bullish.

Looking at the New York Stock Exchange Composite Index at the “Weekly” and “Two Year” chart.

nyse-weekly2

The “Weekly” and “Two Year” chart looks bullish.

“Six Month” and “Daily” chart also looks bullish. 200 day simple moving average remains trending up. We’ll label this secondary index as bullish.

nyse-daily2

Moving on to the Vix Volatility Index chart, starting with our “Weekly” and our “Two Year”; incredibly low.

vix-weekly2

We’ll hide the 200 and the 30 day simple moving average and we’ll swap out the 50 with the 40 so what we’re looking at is a 40 week simple moving average. A 40 week simple moving average is comparable to the 200 day simple moving average. There are five trading days in every week. Five trading days times 40 weeks is 200. As you can see here, implied volatility is extremely low.

Let’s move to the “Six Month” and “Daily” chart.

vix-daily2

We’ll drop the 40 and put in the 200 day simple moving average. You can see that implied volatility is off of its lows but still extremely low nevertheless. Our implied volatility fell 4.77% on Friday, closing at $10.38.

Our overall trading bias remains bullish. Our broad market personality is trending up, range contraction, increasing volatility.

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

Our US fiscal policy still remains in flux. Our monetary policy increased its lending rate this past week; we’re looking at perhaps the ramifications of that in our pricing action.

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

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