Written by A.J. Brown

Broad Market Analysis - September 1, 2017

Hi team. This is A.J. Brown with Trading Trainer on the evening of Friday, September 1 with your Trading Trainer weekend and holiday edition of your daily insights. What we’re 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’re also going to take a look at the New York Stock Exchange Composite Index and the VIX Volatility Index, and because it is a holiday weekend, we’re going to look at both daily and weekly charts.

But before looking at any charts, team, we’re actually going to log into the Trading Trader 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 Tuesday, September 5’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” 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’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 “Charts of Interest” video series, please click on the “Index Stats” sub-tab.

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Our trading bias remains neutral bullish. Our industrials, shown by the Dow Jones Industrial Average, gained 0.81% today on light, below average New York Stock Exchange volume, and it gained 0.8% for the week on flat, below average New York Stock Exchange weekly volume. Our tech stocks shown by the NASDAQ Composite Index gained 0.1% today on light, below average NASDAQ exchange volume, and gained 2.71% for the week on heavy, below average NASDAQ exchange weekly volume. Large caps shown by the S&P 500 Index gained 0.2% today, 1.37% for the week.

Moving on to our secondary indexes, our 100 best stocks out there shown by the S&P 100, gained 0.13% today, 1.41% for the week. Our midcaps shown by the S&P 400 gained 0.4% today, 1.69% for the week. Our small caps shown by the S&P 600 and the Russell 2000, two different perspectives on small caps, gained 0.79% and 0.59% today respectively, and gained 2.34% and 2.62% respectively for the week. Our New York Stock Exchange Composite Index gained 0.36% today, and 0.89% for the week. Our VIX Volatility Index fell 4.34% today, fell 10.2% for the week. Our gold ETF gained 0.19% today, 2.7% for the week. Our oil ETF gained 0.42% today, falling 0.82% for the week.

Let’s take a look at our economic calendar by clicking on the “Daily Insights” tab and the “Economic Calendar” subtab. First thing I need you to do, team, is read today’s “Market Reflections” summary. Then, fast-forward to Tuesday, September 5 and read the “Market Focus” pointers.

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Monday, of course, is the Labor Day holiday here in the United States. Also, please read the once a week “International Perspective” and “Simply Economics” reports. These reports give us a good foundation of what happened the previous week and what to expect for the week to come.

Back to Monday, September 1.

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Motor vehicle sales were reported. In July total vehicle sales had reported in at $16.7 million, for August reports are in at $16.1 million. Domestic vehicle sales in July were at $13.2 million, for August, $12.7 million.

Our employment situation… non-farm payrolls in July were up 209,000. That July number was revised this time around to be 189,000. Also, it’s important to mention that the June number was revised down to 210,000; a revision down by 21,000 jobs. For August, we’re reporting a very low, lower than expectations, 156,000. The unemployment rate in July was at 4.3%, in August we are reporting 4.4%. Private payrolls, 205,000 in July revised down to 202,000, in August 165,000. The participation rate stays at 62.9%. The average hourly earnings month-over-month change, 0.3% in July, only 0.1% in August. Year-over-year it stays solid at 2.5%, and the average workweek went from 34.5 hours in July to 34.4 hours. All to say, the employment situation wasn’t too pleasing in August.

PMI Manufacturing in July was 53.3, in August it came in at 52.8, still above the boom/bust line at 50, but closer. The Institute of Supply Management’s Manufacturing Index in July was 56.3, in August is 58.8. Construction spending in June had dropped 1.3%. We revised that number to be down 1.4% in June, and in July dropped another 0.6%. Year-over-year in June we reported a 1.6% increase in construction spending. We revised that number to be an increase of 2.8%. In July, we’re reporting year-over-year that construction spending increased 1.8%.

Consumer sentiment, the final numbers for August, our preliminary numbers came in at 97.6. Our final numbers for the month of August, the sentiment came in at 96.8, a little bit lower than the preliminary numbers.

Again, to mention, Monday is a holiday. The markets are closed. We’ve got economic news starting on Tuesday going throughout the week. It’ll be a solid economic news week.

Let’s move on to our watch list by going to the “Trading Tools” tab and the “Watch List” sub-tab. Nice tickers identified by both our “Covered Call Writing” and our “Options Trading” candidate filters. We’re going to evaluate those tickers for liquidity and patterns before adding them permanently to our list. Moving onto our “Trading Tools” tab and our “Daily Picks” sub-tab, we’re going to take a deeper dive on our indexes by taking a look at volume and trends.

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Volume today was very low compared to yesterday, very low compared to the 50-day volume simple moving average, very low compared to the 200-day volume simple moving average. The oscillator continues to be very low. It’s as if investors and traders alike checked out for the day to have a long weekend.

Short duration trends are bullish. Long duration trends are neutral. Back to our Trading Trader “Daily Picks Report Generation Tool”. I’m going to take our template algorithm filters. These mathematically go through whatever raw data they are 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 of what the broad market personality is doing as well as what to look for in our watch lists.

With respect to our trend continuation templates, they’re coming up neutral.

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With respect to our trend following templates, they’re pointing towards bullishness, but it’s rather new, telling us that we’re just now in the most fragile cycle one of a new bull trend.

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In our pattern alteration template we can see that our Bollinger Band width indexes are still in the sixes, sevens, eights, and our bar counts are just now breaking into the double digits. It’s a long way before we consider any sort of channeling or consolidation.

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Team, let’s take a look at our charts by going to the “Trading Tools” tab and the “Charting” sub-tab. Let’s start with a “Quick Review” template chart. This is a six-month, daily chart, linear scale, open-high-low-close bar with a separate pane for volume and volume average. I’m going to add to that my 200, 50 and 30-day simple moving averages. These lagging indicators help me determine trend. I have the simple moving averages added to the “Quick Review” template in a user-defined template here in my personal profile. I’m going to apply this to my indexes, specifically the Dow Jones Industrial Average to start. Once this chart loads, team, I’m going to expand it to full-screen.

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Let’s move to a weekly, two-year chart to start.

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This week we recovered some from the losses we had in the beginning of August, and volume stabilized although still on the low side. Our polarity is bullish. Let’s move back to a six-month, daily chart. Our 30-day, 50-day, and 200-day simple moving averages are all trending up. Volume was light today, a Doji bar coming close to 22,000. Our 7-day simple moving average is close to crossing back above the 30-day simple moving average.

Moving to our 5-minute chart, our 5-minute chart has us gaining in the morning session, and then profit-taking in the afternoon session, right before the holiday.

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Taking some notes, we closed at $21,987.56. All our other notes seemed to stay right where they are. Once our 7-day clearly is above our 30-day and we’ve surpassed some horizontal levels of resistance, we’re on the verge of changing our trading bias back to bullish.

Moving to the NASDAQ, we’ll switch to a weekly, two-year chart.

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This week was a real recovery in price for the NASDAQ. Good volume, but still low. Our polarity is very much bullish. Moving to a 6-month daily chart.

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Today price stalled after three wonderful S-bars; stalled up here at resistance; volume was low. The 7 crossed back above the 30, and the 30 has resumed its trend up. Our 200-day resumed its trend up as well.

Moving to a 5-minute chart.

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Today’s price on the NASDAQ looks like it simply stalled sideways. Back to our daily chart, taking some notes. Closed at $6,435.33, our low $6,417.87. I’m going to leave a note about closed above resistance, simple because we haven’t gotten a complete open-high-low-close bar above $6,420. The 7 now is above the 30, and the 30 is now trending up. Again, once we get up above some key levels of resistance, we’ll switch this bias back to bullish.

Taking a look at the S&P 500 index. Moving to a weekly, two-year chart.

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The 30 is up. The 50 is up. The 200 is up. These are all weekly simple moving averages. This week we recovered on a lighter weekly volume, but price looks like it formed a trend continuation pattern, if you will. The polarity remains bullish.

Back to a 6-month, daily chart.

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Today price looks to have stalled after three days of uptrend. Our 50 looks like it’s resumed its uptrend. The 30 is clearly flat. The 200 is up. The 7 has crossed back above the 50, not yet back above the 30.

Moving to a 5-minute chart, the morning session shows some gains, and then the afternoon shows a stall.

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Taking a look at our notes, $2,476.55, our low, $2,473.85. We’ll take a note: “Closed above resistance.” As I said for the NASDAQ, we won’t adjust support and resistance until we get a complete open-high-low-close bar above resistance. The 7 is now above the 50, and the 50 is now trending up. Our trading bias stays at neutral bullish until we cap lines of resistance as well as get our simple moving averages and trends aligned.

Moving to our New York Stock Exchange composite index and a 2-year, weekly chart, similar to the other indexes, our polarity is bullish, and it looks like this week was a recovery to the past couple of weeks.

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Back to our 6-month, daily chart.

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The 7 is starting to aim high, but hasn’t crossed the 50 or the 30 yet. The 50 is trending up. The 30 is still trending down. The 200 is trending up. Of course, we’ve got this nice bar for today. We’ll keep our trading bias for the New York Stock Exchange at neutral bullish.

The VIX volatility index, with our weekly, 2-year chart to start, we’ll use our 40-week simple moving average.

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Volatility has dropped considerably from the mean back to its all-time lows. Switching to a 6-month daily chart and using a 200-day simple moving average, which is analogous to the 40-week simple moving average seeing as how there are 5-days in every trading week…

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We can see here that, again, volatility, especially in the last three days, dropped down considerably. The VIX was down 4.34% today bringing it from $10.59 to $10.13.

Our overall trading bias is neutral bullish. Our broad market personality: we’re in an intra-channel bull trend heading to resistance. I think at this point we can change heading to resistance to, “testing resistance”.

The market is responding to the following, including but not limited to transient external stochastic shocks, and, of course, US fiscal policy, or at this point, lack thereof, US Federal Reserve monetary policy, the monetary policies of China, Europe, and Japan, in that priority order, the price of oil, US economic news, including employment, housing, manufacturing and retail, and, the market news of mergers/acquisitions, initial public offerings, public companies going private, and any earnings.

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

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