Written by A.J. Brown

Broad Market Analysis - October 27, 2017


Hi Team. This is A.J. Brown with Trading Trainer on the evening of Friday, October 27, 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 “Learning Community” web portal by going to login.tradingtrainer.com. After logging into the “Learning Community” web portal, team, we are going to go right to the Daily Insights tab and further to the Recommendation sub-tab.

Team, take a look at our recommendations we have for Monday, October 30’s trading session. Slight changes in these recommendations could have major impact on our trading. We are also going to take a look at the audio commentary. This audio commentary takes us 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 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, please let us go right to the Index Stats sub-tab.

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Our trading bias remains bullish. Team, our industrials shown by the Dow Jones Industrial Average gained 0.14% today on heavy, above average New York Stock Exchange volume, and gained 0.45% for this past week, on light, above average New York Stock Exchange weekly volume. Our tech stocks shown by the NASDAQ Composite Index gained 2.2% today on heavy, above average NASDAQ Exchange volume, and gained 1.09% for this past week on heavy, above average NASDAQ Exchange weekly volume. Our large caps shown by the S&P 500 Index gained 0.81% today and gained 0.23% for this past week.

Moving on to our secondary indexes. Our 100 best stocks out there shown by the S&P 100 gained 1.12% today and 0.43% for this past week. Our mid caps shown by the S&P 400 Index gained 0.54% today and 0.26% for this past week. Our small caps shown by the S&P 600 and the Russell 2000, two different perspectives on small caps, gained 0.57% and 0.73% respectively for today, and gained 0.29% and edged down 0.06% for this past week. Our New York Stock Exchange Composite Index gained 0.11% today and fell 0.51% for this past week. Our VIX Volatility Index fell 13.27% today and fell 1.71% for this past week. Our gold ETF gained 0.47% today and fell 0.58% for this past week. Our oil ETF gained 2.55% today and gained 3.93% for this past week.

Moving on to our Daily Insights tab and our Economic Calendar sub-tab. First thing I need you to do, team, is take a look at today’s Market Reflections summary. And then switch over to Monday, October 30, and click on the Market Focus pointers. Also, on Monday, October 30, you will find the International Perspective and Simply Economics once-a-week reports.

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These reports are worth reading and digesting. These reports set a good foundation, reviewing what happened the past week and setting us up perfectly for the week to come. Please read these two reports.

Now we return back to Friday, October 27.

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The Gross Domestic Product was reported today. The real Gross Domestic Product quarter-over-quarter change seasonally adjusted annual rate last time we reported was up 3.1%, this time it was up 3%. The GDP Price Index quarter-over-quarter change seasonally adjusted annual rate last time reported was up 1%, this time it was up 2.2%. And real consumer spending quarter-over-quarter change seasonally adjusted annual rate last time we reported was up 3.3%, this time it was up 2.4%. Consumer Sentiment was reported. The Sentiment Index level, this is the final number for this month, last time we reported was the preliminary number, was 101.1, this time it’s 100.7, slightly lower.

Taking a look at the week to come. The big news is our employment numbers which will be reported at the end of next week. We have got our manufacturing numbers during the week. We have got our service numbers during the week. We have a Federal Open Market Committee Meeting that begins on Tuesday, ends on Wednesday. From Monday, we have Personal Income and Outlays. Other than that, somewhat of a quiet day. The rest of the week looks busy.

Team, let us move on to our Trading Tools tab and our Watch List sub-tab. Quite a few tickers identified by our Options Trading candidate filter today. We will evaluate these for liquidity and patterns before adding them permanently to our watch list.  Let us move on to our Trading Tools tab and our Daily Picks sub-tab. Here you will find our Daily Picks report generation tool. Let us start by doing a deep dive on our indexes by looking at volume and trends.

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Volume was higher than yesterday, especially on the NASDAQ. You will also notice that we have heavier volume than our 50-day simple moving average and our 200-day simple moving average, especially on the NASDAQ Exchange, and we are starting to show a little bit stronger, consistent volume over the past days as our oscillator is above its oscillator average. In the case of the New York Stock Exchange, very much so. Our long duration trends remain bullish. Our short duration trends look to be neutral.

Now we are going to take 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 it with the raw data of our index tickers. That is going to give us an idea of what the broad market personality is, as well as what to look for in our watch list.

Our Trend Continuation templates continue to show no signals.

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However, the long-term trend that we can see in these templates is undeniable.

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Our Trend Test templates, which are combination of our Trend Reversal and our Short-term Trend Test templates, these Trend Test templates also are showing neutral movement for the most part, a flip-flop between Bull and Bear with no more than a few days being accumulated in either direction. We seem to be, overall, in a state of range contraction.

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Our Pattern Alteration template shows that we are accumulating quite a few days of sideways movement, almost above 20, and that our Bollinger Band Width Index is getting tighter and tighter. As a side note, it does look like our NASDAQ popped out of its Bollinger Bands today.

Let us move on to our Trading Tools tab and our Charting sub-tab. Let us go to a Quick Review template. This is a six-month and daily chart, and linear scale, and open-high-low-close bars, all with a separate pane for volume and volume average. To this Quick Review template, I am going to add my 200, 50, and 30-day simple moving averages. These lagging indicators help me determine trend. I have these simple moving averages added to my Quick Review template in a user-defined template here in my personal profile. I am going to apply this template to the indexes, specifically starting with the Dow Jones Industrial Average. Once this chart loads, team, I am going to expand it to full screen.

The Dow continues to trend up, even if in just small increments. The 30, the 50, and the 200-day simple moving averages trend up. But let’s take a look at our weekly two-year chart.

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This week we had only small incremental gains, and the volume was very heavy. There was a lot of counterforce by the Bears this week. Still, higher highs and higher lows gives us a weekly bullish polarity.Back to our six-month daily chart.

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Switching to our seven-day simple moving average. It too is trending up. And all of our simple moving averages are oriented correctly. Moving to our five-minute chart.

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Our five-minute chart shows, just like yesterday, that we had a sideways choppy day, mostly ending higher by the end. Back to our daily chart. Let us take a look at our notes. We closed today at $23,434.19. Everything else remains the same. Our trading bias remains bullish.

Let us move on to our NASDAQ Exchange. Let us go right to our weekly two-year chart.

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Here we can see an up week but with a very low low. That is telling us that again the Bears pushed us down and the Bulls ultimately prevailed. Still, higher highs, higher lows. We have a bullish weekly polarity. Volume was on the heavy side. Let us move to our six-month daily chart.

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Today, we gapped up and had a crazy S-bar. Our 7 day is pointing up, our 30 day is pointing up, our 50 day is pointing up, and our 200-day simple moving average is pointing up. Today’s volume was very high. Let us see what happened by looking at our five-minute chart.

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We popped up at open and continued to trade up for the day. We closed at $6,701.26. We went from closing below support yesterday to closing above resistance today. Our low is at $6,625.78. So let us just take a note that says “closed above resistance.” We only adjust our support and resistance numbers when we have a complete open-high-low-close bar out of range. All the other variables stay the same. Our trading bias remains bullish.

Switching to our S&P 500 Index. This is the index I feel like most represents our watch list. We will go right to a weekly two-year chart.

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Similar to the Dow, we can see that we gained a little bit this week, but there was a low-low, telling us that the Bears and the Bulls really had it out. The Bears pulled us down. The Bulls brought us back to slightly higher on a high-volume showdown this week. Still, higher highs and higher lows gives us a weekly bullish polarity. Switching back to our six-month daily chart.

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The 30, the 50, and the 200 remain trending up. Our seven day also is trending up. All the simple moving averages are oriented correctly. Today, we had a nice S-bar on heavy volume. Let us see what happened on the five-minute chart.

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Similar to the NASDAQ, we popped up at open and then continued trending higher for the rest of the day, stalling only in the last afternoon hours. Back to our daily chart. Taking a look at our notes. We closed at $2,581.07. Our low was $2,565.94. We will place a note similar to the NASDAQ that says “closed above resistance.” All other parameters stay the same. Our trading bias remains bullish.

Switching to our New York Stock Exchange Composite Index and looking at a weekly two-year chart.

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We continue to see higher highs and higher lows with a weekly bullish polarity. This past week the Bears did bring us lower, the Bulls brought us back but it was not quite able to bring us back up to where we started, but still a strong overall Bull trend over the last two years. Back to our six-month daily chart.

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Today, seemed more of a struggle for the New York Stock Exchange Composite than the others of the big three. Still, our simple moving averages are oriented correctly. Our 30, 50, and 200 are all trending up. We will keep our trading bias at bullish.

Switching to the VIX Volatility Index, starting with a weekly two-year chart, viewing a 40-week simple moving average.

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We can see that implied volatility over this past week popped high, and wound up closing incredibly low, well below the 40-week moving average. Switching to a six-month daily chart and substituting our 200-day simple moving average for our 40-week simple moving average.

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We can see how implied volatility especially on Wednesday went incredibly high, but by the end of today, we are incredibly low at 9.8. Our VIX Volatility Index dropped a whopping 13.27% to close down at $9.80 per share.

Overall, our trading bias does remain bullish.

Our broad market personality is trending up and also overbought. We have range contraction with an increase in hedging.

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

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

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