Written by A.J. Brown

Broad Market Analysis - May 21, 2017

Broad Market Analysis Video Transcript:

Hi team. This is A.J. with Trading Trainer on the morning of Sunday, May 21 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 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 actually going to log into the Trading Trainer learning community web portal by going to login.tradeingtrainer.com. Of course, once we’ve logged into learning community web-portal, team, I will direct you right to today’s daily insight tab and then further to the recommendations sub-tab. Team, take a look at the recommendations we have for tomorrow, which is Monday May 22’s training session. Slight change in these recommendations could have major impact on your trading.

You’re also are going to find here a link to our audio commentary. This is the audio commentary 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 in the background, in another browse tab or browse window, depending on how you have your browser configured. Go and listen to that audio the first time you do click through today’s daily insights 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 attention to the opening and closing comments. In the mean time for this particular broad market analysis of this Trading Trainers video series, let’s go right to index stats.

Our trading bias is neutral/bullish.

Our industrials shown by the Dow Jones Industrial Average gained .69% this past Friday on flat above average New York stock exchange volume. For the last week it dropped .44 percent on heavy above average New York stock exchange weekly volume.
Tech stocks shown by the Nasdaq composite index gained .47% this past Friday on light above average Nasdaq exchange volume. It fell .61% this past week on heavy above average Nasdaq exchange weekly volume.

Large caps shown by the S&P 500 index gained .68% this past Friday, fell .38% for last week.

Taking a look at our secondary indexes, the 100 best stocks out there shown by the S&P 100 gained .61% this past Friday, fell .57% this past week.

Mid-caps shown by the S&P 400 index gained 1.01% this past Friday, fell .42% for the week.

Small cap shown by the S&P 600 and the Russell 2000, two different perspectives on small caps, gained .47% and .46% respectively for this past Friday, falling 1.24% and 1.12% respectively for this past week.

The New York stock exchange composite index gained .95% this past Friday, edged down 3 hundredths of a percent this past week.

The VIX Volatility Index fell 17.87% this past Friday, gaining 15.77% for the week.

The gold ETF gained .5% on Friday, 2.2% for the week.

The oil ETF gained 2.14% this past Friday, 5.33% for the week.

Let’s take a look our economic calendar. First thing I want you to do with this ECONODAY economic calendar, team, is let’s go back to the 19th and I want you to read the market reflections summary from Friday, May 19th. Then we’ll come back and for tomorrow, May 22nd, read the bullet points for the market focus for tomorrow. Also, we have our once a week ‘International Perspective’ report and write up, and our once a week ‘Simply Economics’ report and write up. These are once a week things that I really feel like you should read through and pay attention to. Unbiased ideas of what the market doing. Go back to last Friday. Not much news reflected as much as economic news goes. Looking to tomorrow, we’ve got the Chicago Fed National Activity Index, that’s about it for tomorrow. Throughout the week we’ve got new home sales, we’ve got our regional Fed Manufacturing Index, we got our Federal Housing and Finance Administration Home Price Index, Existing Home Sales. So, a lot of home sales data, a lot of GDP, Durable Goods orders.

Let’s go ahead and take a look at our watch list. For Friday we had two tickers identified by our Options Trading Candidate Filter. We’re going to evaluate those for liquidity and patterns before adding them permanently to our list.
We’re going to move on to our Daily Picks Generation tool. We’re going to go ahead and take a look at our indexes, do a deep dive on them by taking a look at volume and trends. Volume is about the same as Thursday, slightly lower as the 50 day, 200 day… slightly higher. Oscillators are up. Short duration trends are down. Long duration trends are neutral.

Now I’m going to take my template algorithm filters. These mathematically go through whatever raw data that we’re presented with, looking for patterns in the numbers. When we’re presented with the raw data of the 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 for this upcoming week for opportunities. Reactive, Buffered, Chaikin, all showing neutral with our trend continuation templates. Our short term trend test and trend reversal test clearly in the bearish for about two trading days. That means we’re still in cycle one of this down turn. The most fragile of cycles. Two down days does not make a down market. And you can see that we did pop out in most cases of our Bollinger Bands. Our Bollinger Bands are still wide as well. We got fours being the smallest, eights being the largest, and most of the results coming in at fives, sixes and sevens.

Let’s go ahead and take a look at our charts. We’ll start off with a six-month daily chart, linear scale, open high low close bars, separate pane for volume and volume average. We call that our Quick Review chart. I’m going to add our 200, our 50, and our 30-day simple moving average. These lagging indicators help me determine trend. I have them added to the Quick Review template right here in a user defined template here on my personal profile. I’m going to apply that to the indexes, specifically the Dow Jones Industrial Average to start. As soon as this loads team we’re going to expand it to full screen, and well start off by going out to our weekly chart. So we go to weekly, two years’ worth of data. All right, taking a look at these weekly charts, we’ve once again bounced off of 21,000 but we’re way off of our lows. Lower high, although were not really sure whether that’s the high or not. High or low, we’re going to keep a bullish polarity. Coming over to six months. Coming over to daily. The 50-day is clearly down. Not down, but flat. 30-day is flat. 200-day is up. Seven day, coming down. We did get a reversal off of Wednesday’s, stochastic shock down. Volume has been pretty good.

Let’s take a look at our 5-minute chart. Zooming on in here, what we’ve got here is our May 19 data. We can see more gains. Little dip down, profit taking during professional hour.

We’re going to go ahead and pull up our notes. Closing at $20,804.84, we’re right between our support and resistance. We’re saying that our 30-day is now flat and our polarity is bearish. Neutral/Bullish trading bias.

Let’s take a look at the Nasdaq. We’ll go out to weekly, two year. Clearly moving higher, still got a higher high, still got a higher low. Did see the pullback definitely off of the lows. Six month daily chart … We’re at $6,083.70. Our high $6,106.55, so until we get a complete open high low close bar bellow support, we’re going to just keep a note here, we’re not going to adjust our support or resistance. Our seven day is down. Our 30-day and 50-day are up. And, our 200-day is up. Up up up, bullish bullish bullish.
Let’s take a look at the 5-minute chart. Cause we’ve clearly had some recovery since Wednesdays sell off, Thursday was choppy, Friday… again that sell off during professional hour. They had some profit taking at the end of the week.

Let’s move on to the S&P 500 index, the index I feel like best represents our watch list here at Trading Trainer. Two year… under $2,400… good volume on Friday, or this week I should say. Higher low, we’re not sure if this is a higher high. So were going to keep a bullish polarity here. Six month, daily… $2,340 for support, 2400 for resistance. We’re right between at $2,381.73. Let’s see here, the 50-day looks like it has flattened, the 30-day looks like its back up, barely. No crossings, seven, and yes yes yes, up flat up, bullish bullish.

Let’s take a look at the 5-minute chart. Looks like we’ve had gains, but then again there’s that ominous selloff during professional hour. Neutral/Bullish trading bias.

New York Stock Exchange Composite Index. Let’s take a look at the weekly, two year. Also, wondering if we’re stalling here, don’t know if we made a higher high. Let’s come on back to six month, daily. Flat simple moving averages, but we have recovered off of Wednesday’s pull back. 200-day still trends up. Let’s go ahead and categorize this still as a Neutral/Bullish trading bias. Neutral the short term, bullish the long duration.

Let’s take a look at the VIX. I’m going to substitute out my 50 for my 40 so that when I look at my weekly, two-year chart and I drop the 30-week and the 200-week, this 40-week simple moving average will be synonymous with the 200-day simple moving average when we switch to our daily chart. So you can see we popped up, came right back down again. Transient external stochastic shock on Wednesday, recovered on Thursday and Friday. That’s what the transient bit of external stochastic shock means. External means it comes from outside. Stochastic shock means it was a big mover. There’s an art to identifying those while they’re happening so we don’t get knocked out of trades we don’t want to be knocked out of, and we don’t get into trades we don’t want to be in. So you can see it went up, came back down.

Let’s look at that two hundred day, we’re down below the mean, and we actually went down 17.87%, while closing at $12.04.  Our overall trading bias does remain Neutral/Bullish.

Our broad market personality: Transient external stochastic shock retracement. Market is responding to the following, but not limited to, transient external stochastic shocks, that’s what’s driving it. Highest priority. Wasn’t in the past. Is now. U.S. fiscal policy or lack thereof, also driving the market. Then, monetary policy from the Federal Open Market Community. Monetary policies of other countries, namely China, Europe, and Japan, in that order. Price of oil is influencing the market. U.S. economic news down on the list, employment, housing, manufacturing, retail, and of course market news, mergers and acquisitions, initial public offerings, public companies going private, and of course earnings outside of earnings season.

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

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