Written by A.J. Brown

Broad Market Analysis - November 17, 2017


Hi Team. This is A.J. Brown with Trading Trainer on the evening of Friday, November 17, 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 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. And of course, 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 Recommendation sub-tab.

Team, take a look at the recommendations we have for Monday, November 20’s trading session. Slight changes in these recommendations could have major impact on your trading. Also, you are going to find a link to our audio commentary. This is the audio where I take you by the hand through today’s Daily Insights tab 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 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 us go right to Index Stats.

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Team, our trading bias is full-on bullish. Our industrials shown by the Dow Jones Industrial Average fell 0.43% today on heavy, above average New York Stock Exchange volume, and for this past week fell 0.27% on heavy, mixed average New York Stock Exchange weekly volume. Our tech stocks shown by the NASDAQ Composite Index fell 0.15% today on flat, above average NASDAQ Exchange weekly volume, and gained 0.47% for this past week on flat, above average NASDAQ Exchange weekly volume. Our large caps shown by the S&P 500 Index fell 0.26% today and for this past week fell 0.13%.

Moving on to our secondary indexes. Our 100 best stocks out there shown by the S&P 100 fell 0.4% today and for this past week fell 0.44%. Our mid caps shown by the S&P 400 Index gained 0.24% today and 0.82% for this past week. Our small caps shown by the S&P 600 and the Russell 2000, two different perspectives on our small caps, gained 0.41% and 0.4% respectively for today, and gained 1.69% and 1.19% respectively for this past week. Our New York Stock Exchange Composite Index was flat for today and fell 0.16% for this past week. Our VIX Volatility Index fell 2.81% today and gained 1.24% for this past week. Our gold ETF gained 1.2% today and for this past week gained 1.43%. Our oil ETF gained 2.53% today and fell 0.61% for this past week.

Team, let us take a look at our Economic Calendar. We will go to our Daily Insights tab and our Economic Calendar sub-tab. First thing I need you to do is click on our Market Reflections summary for today. Read through this. And then let us fast forward to Monday, the 20th, and read through our Market Focus pointers.

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Let us go back to today, Friday, November 17.

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We released our Housing Starts. In September, the Starts seasonally adjusted annual rate came in at 1.127 million. That September number was revised, this time around, to be a little bit higher at 1.135 million. And then for October we are reporting 1.290 million. Permits, the seasonally adjusted annual rate. In September, we reported 1.215 million. We revised that slightly higher to 1.225 million. And then for October we are reporting 1.297 million. Taking a look at our Kansas City Fed Manufacturing Index. In October, we reported 23. In November, down to 16, still in the boom zone but lower than before.

Checking out the upcoming Monday, November 20. Leading indicators in the morning, but otherwise a quiet trading day. Tuesday, we have got existing home sales. Wednesday, looks like we have got Consumer Sentiment early, because the markets close for a holiday on Thursday and Friday is a half day. What I would like you to do is, on Monday, November 20, take a moment and please read the once-a-week reports labeled International Perspective and Simply Economics. These two reports lay a foundation for what happened the previous week and what is coming up for the week to come. They are worth your time this weekend.

Let us move on to our watch list by going to our Trading Tools tab and our Watch List sub-tab. Quite a few tickers identified by our Covered Call Writing and Option Trading candidate filters. The tickers that are not highlighted in yellow are already on our watch list. They are just reaffirming their position there. For the ones that are highlighted in yellow, we will evaluate those 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 we have our Trading Trainer Daily Picks report generation tool. We are going to do a deeper dive on our index tickers by looking at volume and trends.

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Volume was the same as it was yesterday, which of course was Thursday, November 16. A little bit higher than the 50 day. A little bit higher than the 200 day. The oscillator was up. Our short duration trends are neutral to somewhat bearish. Our long duration trends are bullish minus the small caps and the New York Stock Exchange Composite Index. Backing this up a notch.

Now, we are going to use our template algorithm filters. These mathematically go through whatever raw data you present them 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 of what the broad market personality is doing, as well as what to look for in our watch lists. Our trend continuation templates are not showing any confirmations and very few triggers.

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At the same time, the long-term trends associated with these templates are accruing a lot of long-term trend, and that is worth taking a look at.

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Scrolling to our trend following templates, namely our short-term trend test and our trend reversal test.  These two have mixed results.

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Nothing conclusive as far as trend. Moving on to our pattern alteration template. Our Bollinger Band Width Index, it is getting tight, converging, mostly 2s and 3s. I see a 9 on the NASDAQ, 4s and 5s, but getting tighter. Our bar count in some cases is getting higher, in other cases single digits. Again, a lot of confusion and lot of uncertainty.

Let us go to our Trading Tools tab and our Charting sub-tab. Let us start with a Quick Review template, which is a six-month daily chart, linear scale, open-high-low-close bar and a separate pane for volume and volume average. And to that, I am going to add our 30, 50, and 200 day simple moving averages. These leading indicators help me determine trend. I am going to go ahead and apply those to the Quick Review template here in a user-defined template in my personal profile. I am going to take that user-defined template and pull up my indexes, specifically starting off with a Dow Jones Industrial Average. Let us get right to it.

Once this chart loads, team, I am going to expand it to full screen. 200 day is trending up. 50-day simple moving average is trending up. 30-day simple moving average is flat. But first let us go to our weekly two-year chart.

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Here we can see when we talk about 30, 50, and 200 week simple moving averages, everything is trending up. We have had about four weeks of stall, pretty much the whole month of November, but for the most part, we are in an up trend simply coming off of ascending resistance. Higher highs, higher lows tell us that we have got an up trend on the two-year weekly chart with a bullish polarity. Switching to six-month daily chart.

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We can see the sideways price action. Again, the 30 is moving sideways. The 50 and the 200 are trending up. The seven-day simple moving has crossed down below the 30. Taking a look at today’s five-minute chart.

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As we take a look at today’s price action, we see a drop at open and then sideways price action. No real activity during the day. Let us take some notes. We closed at $23,358.24. Again, our 7 is no longer above the 30. Everything else remains the same. The 30 is flat. Still have a higher high, depending on how we look at it. Higher high, maybe a lower low. We have not quite gotten it, so we are going to say for our daily polarity “Testing Bear.” We are going to wait to see if the 7 crosses down below the 50, and most importantly to see if the 30 goes down below the 50 or if the 50 starts to trend down. We are right on the edge of calling this neutral bullish. I am not there yet. I am right on the edge. This is right on the cusp.

Let us take a look at the NASDAQ. We will go right to our weekly two-year chart.

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Very much trending up. Higher high, higher low, definitely trending up. Six-month daily chart.

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Yesterday, we had a beautiful S-bar, today a stall bar. The seven remains up. The 30 is up. The 50 is up. The 200 is up. Taking a look at our five-minute chart.

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Sideways price action. Back to our daily chart. Closing at $6,782.79. We have a bullish bias as all of our parameters stay the same.

Moving on to the S&P 500 Index, the index I feel like most represents our watch list. Two-year weekly, trending up.

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Yes, we had a stall week, but still one stall week does not make a downtrend. 30, 50, 200, all trending up. These are 30, 50, 200 week. Our polarity on the weekly is bullish. Moving to a six-month daily chart.

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30’s up, 50’s up, 200’s up. Our seven has crossed down below. Taking a look at our five-minute chart.

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Stall today after a little gap down. We closed at $2,578.85. Yes, yes, yes, yes. Up, up, up. Bullish, bullish. Here is the one that changed to No. And otherwise, got a good bias there.

New York Stock Exchange Composite Index. 50’s up, 7’s down, 30’s down. Let us actually start with a two-year weekly chart.

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Here we see a little bit of a stall. Still a higher high, higher low. Now, let us go back and take a new look at the six-month daily chart.

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We crossed. We are going down towards the 50 with our 7. Our 30 is trending down. Our 50 is still trending up. But I think at this point we can change our secondary index to neutral bullish. This one has crossed over the line that the Dow is at.

Moving on to our VIX Volatility Index. Starting with a two-year weekly chart with a 40-week simple moving average.

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We had a doji week but with a huge topside. Switching back to a six-month daily chart with a 200-day simple moving average, which is actually analogous to the 40-week simple moving average, seeing as how there are five days in every week.

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We can see Wednesday had an incredibly high volatility and then the volatility dropped, but we are at the mean, slightly above it, but the mean has Bull down. These are still incredibly low means. Today, we were down, 2.81% down to $11.43.

Our overall trading bias still remains bullish.

Our broad market personality, well, it actually still remains trending up. It is still incredibly overbought. It is still in a major range contraction phase, and we are still hedging in the Options market. We see that more than ever. The big way to summarize this is to say “there is confusion and uncertainty among investors”.

The market is responding to the following, including but not limited to, transient external stochastic shocks, the U.S. fiscal policy or lack thereof, we will see what happens with the tax policy. U.S. Federal Reserve monetary policy, the Federal Reserve is itching to raise interest rates and start unwinding quantitative easing. Monetary policies of China, Europe, and Japan, the price of oil, U.S. economic news including employment, housing, manufacturing, and retail, market news of mergers, acquisitions, initial public offerings, public companies going private, and earnings.

That is all I have got, team. Please take care.

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