Written by A.J. Brown

Broad Market Analysis - November 10, 2017


Hi Team. This is A.J. Brown with Trading Trainer on the evening of Friday, November 10, with your Trading Trainer weekend edition of your Daily Insights. What we are 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 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.

Once we have logged into the “Learning Community” web portal, team, I am 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, November 13’s trading session. Slight changes in these recommendations could have major impact on your trading. You are 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 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 us go right to the Index Stats sub-tab.

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Team, our trading bias remains bullish. Our industrials shown by the Dow Jones Industrial Average fell 0.17% today on light, below average New York Stock Exchange volume, and for this past week it fell 0.5% on flat, below average New York Stock Exchange weekly volume. Our tech stocks shown by the NASDAQ Composite Index edged up 0.01% today on light, above average NASDAQ Exchange volume, and for this past week fell 0.2% on light, above average NASDAQ Exchange weekly volume. Our large caps shown by the S&P 500 Index edged down 0.09% and for this past week fell 0.21%.

Moving on to our secondary indexes. Our 100 best stocks out there shown by the S&P 100 fell 0.15% today and for this past week fell 0.26%. Our mid caps shown by the S&P 400 Index edged down 0.02% today and for this past week fell 0.56%. And our small caps shown by the S&P 600 and the Russell 2000, two different perspectives on small caps, edged up 0.07% and 0.02% respectively for today, and for this past week fell 0.79 and 1.31% respectively. The New York Stock Exchange Composite Index fell 0.14% today and for this past week fell 0.41%. And for our Volatility Index, our VIX gained 7.52% today and gained 23.52% for this past week. Our gold ETF fell 0.82% today and gained 0.42% for the week. Our oil ETF fell 0.35% for today and gained 2.15% for the week.

Let’s take a look at our Economic Calendar. Let’s click on our Daily Insights tab and our Economic Calendar sub-tab. First thing I need you to do, team, is click on today’s Market Reflections summary.

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And then fast forward to Monday, November 13, and click on the Market Focus pointers. Also, found on Monday, November 13, is our International Perspective and Simply Economics reports.

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These once-a-week reports lay a foundation for what happened last week and for what is coming up for the week to come. Please read those two reports. They are significant and a good source of grounding for understanding the markets. Coming back to today, November 10. Consumer Sentiment was reported. The Sentiment Index level for November, preliminary numbers came in at 100.7 last time, this time came in lower at 97.8. Looking forward to next week. A little bit more activity than we had this previous week as various regions start to report their manufacturing for the month. We also get our producer’s price index and our consumer price index, otherwise known as wholesale and retail inflation. We get our retail sales numbers, and some housing data.

Let us move on to our watch list. Let us go to our Trading Tools tab and our Watch List sub-tab. These tickers identified by our Covered Call Writing candidate filter and our Options Trading candidate filter are slated for our watch list. We will evaluate them for liquidity and patterns before adding them permanently to our list.

Moving on to our Trading Tools tab and Daily Picks sub-tab, we will do a deeper dive on our indexes by looking at volume and trends.

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The volume today was lower, especially on the NASDAQ compared to yesterday. Compared to the 50-day simple moving average and the 200-day simple moving averages, the volume was about the same. Compared to the oscillator average, the volume has been heavier, showing that we have had consistently heavy volume for the last days. Our long duration trends remain bullish. Our short duration trends remain neutral. The only exceptions are the small caps, which are hinting at a little bit of bearishness.

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 are going to present them with the raw data of our 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 continuation templates are indecisive; however, the long-term trends associated with them are undeniable.

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Our short-term trend template and our trend reversal template are showing bearishness on cycle one.

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Either we are seeing a top or a long-term trend is being tested.

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We do not know yet. We need to have these patterns mature. Taking a look at our Pattern Alteration template, our Bollinger Band Width Index is getting tighter on average and our bar counter is incrementing.

Let us move on to our charts. Let us go to our Trading Tools tab and our Charting sub-tab. Let us take a look at our Quick Review template. This is a six-month daily chart with a linear scale, open-high-low-close bars, and a separate pane for volume and volume average. To that Quick Review template, I am add our 30, 50, and 200-day simple moving averages. These lagging indicators help me determine trend. I applied these lagging indicators to the Quick Review template in a user-defined template here in my personal profile. Let us go ahead and look at the index tickers using that template, specifically starting out with the Dow Jones Industrial Average.

Once this template loads, team, I am going to expand it to full screen. I am going to go immediately to a weekly two-year chart, because this is our weekend edition of our Broad Market Analysis.

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Good volume for the past weeks. This week showed a little bit of a down bar but not significant to move us out of the ascending channel. In fact, it is barely a blip on the radar. Higher highs, higher lows gives us a weekly bullish polarity. Moving to our six-month daily chart.

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Our 30, 50, and 200-day simple moving averages remain trending up, even though we have had some doji bars trending down over the last trading days. Today’s volume was slightly lower. Still, we are in our uptrend channel. Range contraction is not a bad thing when you are in a Bull trend. The seven-day simple moving average continues to trend up, despite being above price. Taking a look at the five-minute chart to see what happened today.

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Team, today, price simply moved sideways in a tight channel, as if investors checked out for the Veterans Day holiday. Taking a look at our notes. We closed at $23,422.21, still between support and resistance. Our metrics remain the same. Our trading bias is bullish.

Moving to the NASDAQ. Taking a look at our weekly two-year chart.

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A doji week, nice volume showing the pressure between the Bulls and the Bears. Still, no hint of anything else but a bullish bias on the weekly charts. Switching back to our six-month daily chart.

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Our 7 remains up, our 30, 50, and 200 day simple moving averages remain up. Volume today was less. Switching to our five-minute chart to see what happened today.

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Again, just sideways price action showing that maybe investors checked out for the day. Back to our daily chart. Looking at our notes. Closing at $6,750.94. Everything else remains bullish. Our trading bias remains bullish.

Moving on to the S&P 500 Index, the index I feel like most represents our watch list. Going to a weekly two-year chart.

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Seeing yet another doji bar. All of our simple moving averages are pointing up. Our trend is pointing up. Our long-term trend is clearly up. Moving back to a six-month daily chart.

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The last days have been doji bars in a descending channel, but overall we are simply in range contraction scraping support of the ascending channel. Volume is good. Our simple moving averages are pointing up, including the seven day. Taking a look at our five-minute chart.

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Again, another sideways day as if investors checked out. We closed at $2,582.30. All of our metrics are up. Our trading bias is bullish.

Looking at the New York Stock Exchange Composite Index. Going to a weekly two-year chart.

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We see on this particular index a stall for the last three weeks. Moving back to a six-month daily chart.

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Of all the indexes, this is the one that has had the most range contraction and still yet we have a bullish bias with the 30, 50, and 200 trending up, and all of our simple moving averages oriented in a Bull trend. We will keep our trading bias as bullish.

Remember, leading indicators are not to be acted on. They are simply to trigger us to look for lagging indicators. The leading indicators are hinting at being overbought, but our lagging indicators still show Bull trend.

Going to our VIX Volatility Index. Looking at a two-year weekly chart with a 40-week simple moving average installed.

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This week we had our implied volatility go right up to the average. Still, our average and the implied volatility has been incredibly low. Moving to our six-month daily chart.

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Implied volatility popped today. We are looking at a 200-day simple moving average, which is analogous to our 40-week simple moving average since there are five days in every trading week. We can see the VIX closing above our mean. Our VIX closed up today 7.52%, closed at $11.29 per share. Still, that is incredibly low over history.

Our overall trading bias remains bullish.

Our broad market personality remains trending up but overbought and in a state of range contraction. We are seeing hedging in the Options market. In other words, overall, we are seeing confusion and uncertainty among investors.

The market is responding to the following, including but not limited to, anything having to do with transient external stochastic shocks. Our Twitter tweeter and chief has been out of the United States, so we have not seen many transient external stochastic shocks. Still, we have seen elections this past week going different than expected. We have seen natural disasters still happening. We have had all sorts of transient external stochastic shocks. And then most of all it seems like we have been looking at the U.S. fiscal policy or lack thereof. We are talking about tax reform that may or may not go through; looking like it may not. U.S. Federal Reserve monetary policy that was stalled yet again. Monetary policies of China, Europe and Japan. The price of oil. U.S. economic news including employment, housing, manufacturing and retail. And, 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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