Written by A.J. Brown

Broad Market Analysis - November 24, 2017


Hi team, this is A.J. Brown with Trading Trainer on the evening of Friday, November 24 with your Trading Trainer weekend edition of your Daily Insights. What we are going to do here is take a look at our 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 weekly and daily charts. But, before looking at any charts, team, we are actually going to log into the Trading Trainer Learning Community web portal by going to login.tradingtrainer.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, November 27th’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 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’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 close attention to the opening and closing comments. In the meantime, for this particular Broad Market Analysis of this Chart of Interest video series, let’s go right to our Index Stats sub-tab.

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Our trading bias does remain full-on bullish. Our industrials shown by the Dow Jones Industrial Average gained 0.14% today on light, below average New York Stock Exchange volume, and gained 0.86% for this past week on light, below average New York Stock Exchange weekly volume. Our tech stocks shown by the NASDAQ Composite Index gained 0.32% today on light, below average NASDAQ exchange volume, and gained 1.57% for this past week on light, below average NASDAQ exchange weekly volume. Our large caps shown by the S&P 500 Index gained 0.21% today and 0.91% for this past week.

Moving on to our secondary indexes, our 100 best stocks out there shown by the S&P 100 gained 0.22% today and gained 1.02% for this past week. Our mid caps shown by the S&P 400 Index edged up 0.07% today and gained 1% for this past week. Our small caps shown by the S&P 600 and the Russell 2000, two different perspectives on small caps, gained 0.15% and 0.16%, respectively, for today; and gained 2.02% and 1.76%, respectively, for this past week. Our New York Stock Exchange Composite Index gained 0.25% today and gained 0.97% for this past week. Our VIX Volatility Index fell 2.13% today, and fell 15.4% for this past week dropping to 9.67 which is uberly, extremely low. Our Gold ETF fell 0.25% today and fell 0.44% for this past week. Our oil ETF gained 1.64% for today and gained 3.88% for this past week.

Team, let’s take a look at our economic calendar by going to our Daily Insights tab and our Economic Calendar sub-tab. First thing I need you to do today is read today’s Market Reflections summary and then we’ll fast forward to Monday, November 27 and read our Market Focus pointers.

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Also, because it is the weekend, we’ll read our Simply Economics report. This is a once-a-week report that gets published, that gives us a foundation derived from the past week of economic news and what to expect for the week to come. This is a must read.

Moving on, back to today, Friday, November 24, we had a shortened trading day.

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Our PMI Composite Flash for October was at 55.7. For November, it dropped to 54.6. Manufacturing in October was 54.5. It dropped in November to 53.8. The services was at 55.9 in October. In November, it dropped to 54.7. 50 is our boom/bust demarcation, so we’re still above in the boom area, just not as much.

Moving ahead to next week, on Monday, we have new home sales. Otherwise, we are expecting a quiet trading day. Tuesday, we have more home sales reports along with international trading goods. Wednesday, we have GDP numbers and the pending home sales index. Thursday, we have personal income and outlays. Friday, we have our manufacturing and construction spending numbers.

Let’s move on to our Trading Tools tab and our Watch List sub-tab. We have quite a few candidates identified by our option trading candidate filter. We’re going to evaluate those for liquidity and patterns before adding them permanently to our watch list.  We’re going to move on to our Trading Tools tab and our Daily Picks sub-tab. Here, we have our Daily Picks report generation tool. We’re going to do a deeper dive on our indexes by looking at volume and trends.

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Volume was extremely low today, of course, because the market closed early. Low compared to Wednesday, low compared to the 50, the 200. Oscillator was very much down. We have a volume imbalance on the NASDAQ. Short-duration trends are clearly bullish. Long durations are bullish up to the point to where we’re looking at the small caps. Small caps have come in neutral as well as the New York Stock Exchange.

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 the index tickers that’s going to give us an idea what the broad market personality is as well as what to look for in our watch lists. The trend continuation templates are, for the most part, neutral.

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I am paying attention to the long-term trend, in some cases, in triple digits. Short-term trend test is showing clearly bullishness.

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Trend reversal needs to kick in on some of these candidates, but for the most part, we’re in cycle 1 of a new bull trend.

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Our Bollinger Band Width Index of our pattern alteration template are in the 4s and 5s, 6s. The bar count for the most part is still incrementing.

Let’s take a look at our charts by going to Trading Tools tab and the Charting sub-tab. We’ll take a look at our Quick Review template. Our Quick Review template is a six-month daily chart with a linear scale and open-high-low-close bars. To that, I’m going to add our 30, 50, and our 200-day simple moving averages. These lagging indicators help me determine trend. I have these lagging indicators added to the Quick Review template, here, in a user-defined template in my personal profile. We’re going to apply this template to the indexes, specifically starting with the Dow Jones Industrial Average. Team, once this template loads, I’m going to expand it to full screen.

First thing we’re going to do is go to our weekly chart and two years’ worth of data.

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This week, we got an S-bar resuming our trend in the upward direction. Clearly on the two-year weekly chart we’re continuing with our uptrend. Back to our six-month daily chart, here you can see that our 30, 50 and 200-day simple moving averages continue to trend up.

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Price looks like it’s trying to make some headway getting past the highs from a couple of weeks ago. Light volume days as a lot of investors checked out this week; still, making some slow progress. Our seven-day is trending up again as well.

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As you can see in today’s shortened trading day, we had kind of a gap up at open and then moved up and then sort of stalled for the day. Back to our daily chart, let’s take a look at our notes. We closed at $23,557.99. Our 7 is above our 30-day. Our 7 is above our 50-day. Our 30 is above our 50-day. Our 50-day is above our 200-day. Our 30-day is trending up and let’s see here, we’ve got lower lows and then, we have higher highs. This particular high is trading at $23,617.80. This one is $23,602. We have a higher high, so we are now testing bull. Otherwise, everything else stays the same.

Let’s switch over to the NASDAQ Exchange and go immediately to a weekly two-year chart.

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As you can see here, this was a strong week for the NASDAQ. The NASDAQ continues to lead and it’s trending up. Going back to our six-month daily chart, our 7, our 30, our 50 all remain up.

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Our 200 remains up. Moving to our five-minute chart, it trended up for the day.

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We’re at $6,889.16. We’re going to go ahead and make $6,800 our level of support on the NASDAQ and we’ll use the psychological level of 6,900 as our new level of resistance since we’re going for all-time highs. Another case where it looks like everything else remains bullish. We’ve got higher highs and higher lows.

Let’s move on to the S&P 500 Index. Here’s the index I feel like most represents our watch list. We’ll go to a weekly two-year chart.

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We have a very nice up week continuing to have the bull trend that we’ve all grown to be accustomed to. Moving to our six-month daily chart, our 30 remains up. Our 50 remains up.

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Our 200 remains up. Our 7 is trending up. We had a nice bar today. Let’s take a look at our five-minute chart.

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Our five-minute had a gap up and then traded up for most of the day, $2,575 to $2,600. We closed at $2,602.42. Our low was $2,600.42. What we’re going to do here is take a look right here at this rising window and this level of support. We’re going to go at $2,590 as our level of support and then we’ll go to $2,600.25 for our psychological level of resistance. Our 7 remains above the 30, above the 50. Everything else remains bullish.

Moving to our New York Stock Exchange Composite Index, switching to a weekly two-year chart, even the New York Stock Exchange that we were saying we had the most concern about seems to be going to the bullish side again.

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Switching back to our six-month daily chart, this week was a very much up week.

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The 7 is coming back above the 30. The 30 is starting to trend up again. The 50 is trending up. The 200 is trending up. We’ll go ahead and stick with our neutral bullish for now. If we get up above this level of resistance next week when traders return, we’ll change it back to bullish. But for now, let’s go the weekend through neutral bullish.

Our VIX Volatility Index, starting with the weekly two-year chart.

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We’ll use a 40-week simple moving average. This week, we closed very much lower than the mean versus last week where we were above the mean. Back to six-month daily, swapping the 40 with the 200-day simple moving average which is very much analogous to the 40-week simple moving average as there’s five trading days in every trading week.

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As you can see, the implied volatility has gone back to being extremely uberly low. We were down 2.13% today, closing at $9.67.

Team, our overall trading bias still remains bullish. Our broad market personality is still trending up and it is still overbought. We have light volume; lacking volume validation. We have confusion and uncertainty still among investors, perhaps investors have checked out.

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

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

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