Broad Market Analysis – August 10, 2018

Hi, this is A.J. Brown with Trading Trainer on the evening of Friday, August 10, 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, 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, I’m going to direct you right to today’s Daily Insights tab and further to the Recommendations sub-tab. Take a look at the recommendations we have for Monday, October 13’s trading session. Slight changes in these recommendations could have a 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 tab 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. 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 to the Daily Insights tab and the Index Stats sub-tab.

Our trading bias is neutral bullish. Our industrial’s, shown by the Dow Jones Industrial Average, fell 0.77% on heavy, mixed average New York Stock Exchange volume and for this past week, fell 0.59% on heavy, mixed average New York Stock Exchange weekly volume. Our technology stocks shown by the NASDAQ Composite Index fell 0.67% on heavy, mixed average NASDAQ exchange volume and gained 0.35% on heavy, above average NASDAQ exchange weekly volume. Our large caps, shown by the S&P 500 Index fell 0.71% today and for this past week, fell 0.25%.

Moving on to our secondary indexes, our 100 best stocks out there shown by the S&P 100 Index fell 0.76% today and fell 0.14% for this past week. Our mid-caps shown by the S&P 400 Index fell 0.59% today and 0.2% for this past week. Our small caps are shown by the S&P 600 and the Russell 2000 Indices, two different perspectives on our small caps, falling 0.15% and 0.24% respectively for today, and gained 0.75% and 0.80% respectively for this past week. Our New York Stock Exchange Composite Index fell 0.87% today and fell 0.85% for this past week. Our Vix Volatility Index gained 16.77% today and gained 13.06% for this past week. Our Gold ETF edged down 0.04% today and fell 0.2% for this past week. Our Oil ETF gained 1.44% today and fell 1.33% for this past week.

Let’s take a look at our Daily Insights tab and our Economic Calendar sub-tab. First thing I’d like you to do is read the Market Reflections summary report for Friday, August 10. Then I’d like you to read the Market Focus pointers report for Monday, August 13. Then I’d like you to turn your attention to the once-per-week reports, mainly the International Perspective and Simply Economics reports. These two reports found on Monday, August 13, are must reads. They summarize what happened the previous week and talk about what to expect for the week to come. Please go through these two reports.

For today, our Consumer Price Index (CPI) was released. Our Consumer Price Index month-over-month for June was up 0.1%. For July, we’re reporting being up 0.2%. Our Consumer Price Index year-over-year change in June was up 2.9%, and that’s what it stays at for July, up 2.9%. Our Consumer Price Index factoring out food and energy, month-over-month in June was up 0.2% and that’s what it stayed at for July, up 0.2%. Our Consumer Price Index factoring out food and energy year-over-year change in June, we’re reporting up 2.3%, and in July, up 2.4%.

We also, this afternoon, released our Treasury Budget. In June, we reported a $74.9 billion dollar deficit. In July, we reported an even bigger deficit at $76.9 billion dollars.

Looking at the week to come, Monday is a very quiet news day so the response that we had today to some of the weakness that’s appearing in the economy, and more importantly, to the transient external stochastic shock having to do with the economy in Turkey, will probably be the driver for even this upcoming Monday. This is, at least at the beginning of the week, a quiet news week. News starts to pile on towards the end of next week.

Let’s go to our Trading Tools tab and our Watch Lists-sub tab. We had quite a few tickers identified by our Options Trading Candidate filter. We will evaluate these candidates for liquidity and patterns before adding them permanently to our watchlist. The Options Trading Candidate filter shows all candidates highlighted in yellow, meaning they are all new to us and up for final evaluation.

Moving on to our Trading Tools tab and our Daily Picks sub-tab, let’s take our Index Tickers and do a deeper dive by looking at volume and trends. Volume was about the same, slightly higher. Was about the same as the 50-day simple moving average on volume, slightly higher. Our volume was about the same as the 200-day simple moving average on volume, slightly lower. The oscillator shows that we’ve had consistently strong volume over the past days.

Our short duration trends are neutral with a hint of bullishness. The same is true for our long duration trends. 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’s going to give us an idea of what the broad market personality is doing, as well as what to look for on our watch lists.

The trend continuation trio of templates is hinting mostly of no trend, but in some cases we see a trend continuation pattern happening in the bullish direction.

More importantly, the short-term trend template and the trend reversal template are showing mixed trends, hinting that perhaps we are in some sort of sideways channel, bouncing down and up in intra-channel movements, bouncing at support and resistance. It seems to be what this table is telling me.

Moving on to our pattern alteration template, our bar counter, for the most part, is still very high and our Bollinger Band width index is still in the channeling zone.

Now it is time for us to take a look at our charts. Let’s go to our Trading Tools tab and our Charting sub-tab. We’ll start with our Quick Review template, which is a six-month daily chart with a linear scale and open-high-low-close bars. To that, we will add our 30, 50, and 200-day simple moving averages. These lagging indicators help me determine a trend. I have those simple moving averages added to the Quick Review template here in a user-defined template in my personal profile. I am going to apply this user-defined template to the index tickers, specifically starting out with the Dow Jones Industrial Average.

Beginning with a weekly, two-year chart, because this is a weekend analysis, we can see that we have potentially found a top at resistance. Still higher highs and after lower lows gives us a testing bull weekly polarity. Let’s take a look at a six-month, daily chart. Here you can see a huge sell-off today. After three days ago, finding a new high, our simple moving averages are all trending up and oriented correctly for a bullish trend. Switching to our five-minute chart, again you can see the gap down on open and then, for the most part, a sideways choppy day. Back to our daily chart, we closed at $25,313.14. Everything else remains the same. Our trading bias remains at neutral bullish.

Switching to the NASDAQ Composite Index, starting with a weekly, two-year chart, we continue to see the uptrend with higher highs and higher lows telling us that we are in a bullish weekly polarity. Switching to a six-month, daily chart, we can see that gap down in price from today as well. Our simple moving averages are trending up. We will transition to a five-minute chart and we can see the gap down on open and the sideways channeling. We closed at $7,839.11. Everything else seems to remain the same. Our trading bias on the NASDAQ is bullish.

Looking at our S&P 500 Index, starting with a weekly, two-year chart, we are continuing to trend up. Despite having a tough week, our polarity remains bullish. Moving to a six-month, daily chart, we again can see the gap down on open. Our simple moving averages continue to trend up. They are also oriented in a way that supports a bull trend. Switching to a five-minute chart, again we see a gap down on open and sideways chop. We closed at $2,833.22. Our high was $2,842.20, so, therefore, we need to adjust our support and resistance. It looks like we should be looking at $2,845 and $2,800. Our overall trading bias still remains on the neutral bullish side as we try to break through our level of resistance.

Our New York Stock Exchange Composite Index, starting with a weekly, two-year chart, has found some overhead resistance as well. Switching to our six-month, daily chart, a very large gap down on open after resistance. I’m going to keep our trading bias on the New York Stock Exchange Composite Index marked as neutral.

Switching to our VIX Volatility Index and popping it to a weekly, two-year chart, we can see that our implied volatility went extremely low this past week, but is back up loitering against our mean. On this two-year, weekly chart, we’re looking at a 40-week simple moving average. When I transition to a six-month, daily chart, I’m going to transition to a 200-day simple moving average. A 200-day simple moving average is analogous to a 40-week simple moving average as there are five days in every week of trading. Here you can see the implied volatility make a massive jump today from a low we haven’t seen in months back up to where we were, just slightly shy of our exponential moving average. We closed up 16.77%, which brings us to $13.16 per VIX share.

Our overall trading bias remains neutral bullish.

Our broad market personality is testing that top.

Our market is responding to the following, including, but not limited to, Transient External Stochastic Shocks (an example of this is this whole debacle in Turkey), U.S. Fiscal Policy (that’s the tax program), U.S. Federal Reserve Monetary Policy (that’s the raising and lowering of the overnight borrowing rate), Monetary Policies of China, Europe, and Japan, the price of oil, U.S. economic news, including employment, housing, manufacturing, and retail, and finally, market news, like mergers and acquisitions (M&As), initial public offerings (IPOs) l, public companies going private, and earnings.

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