Written by A.J. Brown

Broad Market Analysis - October 6, 2017

Hi, team. This is AJ Brown with Trading Trainer on the evening of Friday, October 6 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. 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 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 our Recommendation subtab.

Team, take a look at the recommendations we have for Monday, October 9’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 tab and its subtabs. 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 browser configured. Go ahead and listen to that audio the first time you do click through today’s Daily Insights tab and its subtabs. 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, please click on the Index Stats subtab.

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Our trading bias remains bullish. Our industrials shown by the Dow Jones Industrial Average edged down 0.01% today on light, below average New York Stock Exchange volume and gained 1.65% for the week on light, below average New York Stock Exchange weekly volume. Our tech stocks shown by the NASDAQ Composite Index edged down 0.07% today on light, below average NASDAQ Exchange volume and gained 1.45% for the week on light, below average NASDAQ Exchange weekly volume. Our large caps shown by the S&P 500 Index fell 0.11% today and gained 1.19% for the week.

Moving on to our secondary indexes, our 100 best stocks out there shown by the S&P 100 Index fell 0.13% today and gained 1.15% for the week. Our mid caps shown by S&P 400 Index edged down 0.08% today and gained 1.25% for the week. Our small caps shown by the S&P 600 Index and the Russell 2000 Index, two different perspectives on small caps, fell 0.18% and 0.12% respectively today and gained 1.23% and 1.3% respectively for the week. Our New York Stock Exchange Composite Index fell 0.17% today and gained 0.9% for the week. Our VIX Volatility Index gained 5.01% today closing at $9.60 per share and gained 1.47% for the week. Our Gold ETF gained 0.47% today and fell 0.4% for the week. Our Oil ETF fell 2.73% today and fell 4.41% for the week.

Let’s take a look at our economic calendar by going to the Daily Insights tab and the Economic Calendar subtab. Team, the first thing I need you to do is click on and read today’s Market Reflections summary and then fast forward to Monday, October 9.

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Click on and read October 9’s Market Focus pointers. Also, please notice on Monday, October 9 that there are published International Perspective and Simply Economics Reports. These once-a-week reports are worth our time to go through. Please go ahead and read the International Perspective and the Simply Economics Reports this weekend.

Returning back to today, Friday, October 6 on our calendar, the Employment Situation’s nonfarm payrolls month-over-month change in August was up 156,000.

calendaroct6

That was revised this time around to actually be up 169,000. For September, well, nonfarm payrolls fell 33,000, well-below expectations. Quite a surprise. The unemployment rate in August was 4.4%. In September, it came in at 4.2%. Looking at private payrolls in August, they were up 165,000, revised this time around to be 164,000 and private payrolls fell 40,000 for September. Manufacturing payrolls, 36,000 in August, revised up to 41,000 in August. They fell by 1,000 in September. Participation rate in August, 62.9%; in September, 63.1%. The average hourly earnings month-over-month change in August up 0.1%. We revised that number to be up 0.2% this go around. In September, we’re reporting a rise of 0.5%. Year-over-year average hourly earnings in August were up 2.5%, again, revised to 2.7% this time around. For September, we’re reporting 2.9%. Our average work week stayed the same. In August, we reported 34.4 hours; in September, 34.4 hours as well. The drop in nonfarm payrolls, the participation rate, and the average hourly earnings all cut the market off guard today.

Then we look at wholesale trade. In July, the month-over-month inventories were at 0.6%; in August, 0.9%.

Taking a look at the consumer credit numbers, in July, month-over-month consumer credit was up $18.5 billion dollars, that actually was revised down this time to be around to $17.7 billion, and for August, falling to $13.1 billion

Next week, Monday, is expected to be a slow day for the US bank holiday for Columbus Day. The markets will be open. We have producers and consumers price index later in the week, which reports wholesale and retail inflation, respectively. We have the FOMC meeting minutes reported on Wednesday, from the last FOMC meeting. Otherwise, it looks like it will be a quiet week besides whatever news is happening in the headlines.

Let’s take a look at our watch list by going to the Trading Tools tab and the Watch List subtab. We had quite a few tickers identified by our options trading candidate filter. We are going to evaluate these for liquidity and patterns before adding them permanently to our watch list.

Let’s click on the Trading Tools tab and the Daily Picks report generation subtab. We will take a look at the volume and trends of our indexes.

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We’ll do a deep dive on our indexes. Volume was about the same, slightly lower today, slightly lower than the 50-day, probably more lower compared to the 200-day. The oscillator is mixed. Our short duration trends remain bullish. Our long duration trends remain neutral.

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 the 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.

The Reactive, Buffered, and Chaiken templates show no trend continuations but do show an accumulation of long-term trend.

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Our Short-Term Trend template and our Trend Reversal template are showing some bullishness, perhaps on a subsequent cycle based on the amount of 5-day simple moving average count trend.

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Our Pattern Alteration template, for the most part, is showing that we have altered our pattern. There’s nothing really to be seen here.

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

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Our 30, our 50, and our 200-day simple moving averages remain trending up and our seven-day remains trending up. Let’s go to a weekly, two-year chart.

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Higher highs, higher lows, beautiful S-bar for this week although volume validation seems to be lacking. Back to our six-month, daily chart. As I mentioned, our trends are trending bullishly and they’re oriented correctly. Let’s take a look at the five-minute chart.

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After a week of gains, the market took a break today with just some sideways calm price action. Today’s volume was light. Let’s take a look at our notes. We closed at $22,773.67. Our low was $22,730.85. We’ll keep our support and resistance levels where they are with resistance being at $22,750. We’ll take a note that says closed above resistance. We won’t adjust our support and resistance lines until we have a complete open high-low close bar above resistance. Everything else remains the same; bullish trading bias.

Let us take a look at the NASDAQ Composite Index. We will start with a weekly, two-year chart.

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Beautiful S-bar for the week; higher highs, higher lows. Actually, nice volume for the week. Back to our six-month, daily chart.

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The simple moving averages all are oriented correctly and trending nicely. Taking a look at our five-minute chart, again, a quiet day of just sideways price action after a week of gains.

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Light volume for today. We closed at $6,590.18 cents. Our low was $6,566.84 cents. We are going to adjust our level of support to being $6,550 and resistance being $6,600. Everything else remains bullish and stays the same.

Let us take a look at the S&P 500 Index, the index I feel most represents our watch list. We will start with a weekly, two-year chart.

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Beautiful S-bar for the week, but with light volume; a lack of verification of that S-bar. Moving back to a six-month, daily chart.

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Our simple moving averages are oriented correctly and trending bullishly, including the seven-day simple moving average. Going to our five-minute chart, like the other two of the big three indexes, we see stall today of sideways price action and light volume.

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We closed at $2,549.33 cents. All of our notes stay the same. Our trading bias is bullish.

Moving to the New York Stock Exchange Composite Index, starting with a weekly, two-year chart.

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Beautiful S-bar trending up. Returning to a six-month daily chart, a stall for today.

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Still our trading bias remains bullish on the New York Stock Exchange Composite Index.

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

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Our implied volatility of the S&P 500 is extremely low, well-below its mean of the 40-week simple moving average. Returning to a six-month, daily chart with a 200-day simple moving average, which is commensurate with the 40-week simple moving average, still shows an extremely low implied volatility of the S&P 500 as represented by the VIX, even with today being an up day for implied volatility. The VIX Volatility Index increased by 5.01% today to $9.60.

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Our overall trading bias does remain bullish.

Our broad market personality continues to trend up is overbought and we are in the second cycle of range expansion.

Our market is responding to the following, including but not limited to, transient external stochastic shocks; US fiscal policy or lack thereof; US Federal Reserve monetary policy; the monetary policies of China, Europe, and Japan; the price of oil; US economic news, including employment, housing, manufacturing, and retail; the market news of 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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