Broad Market Analysis – August 17, 2018

Hi. This is A.J. Brown with Trading Trainer on the evening of Friday, August 17, with your Trading Trainer weekend 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 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, we are actually going to log in to 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, August 20’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, we’ll go to the Daily Insights tab and the Index Stats sub-tab.

Our trading bias remains neutral bullish. Our industrials shown by the Dow Jones Industrial Average gained 0.43% today on heavy, below average New York Stock Exchange volume, and gained 1.41% for this past week on light, below average New York Stock Exchange weekly volume. Our technology stocks shown by the NASDAQ Composite Index gained 0.13% today on light, below average NASDAQ Exchange volume, and fell 0.29% for this past week on light, below average NASDAQ Exchange weekly volume. Our large caps shown by the S&P 500 Index gained 0.33% today and gained 0.59% for this past week.

Moving on to our secondary indexes. Our 100 best stocks out there shown by the S&P 100 Index gained 0.28% today and 0.55% for this past week. Our mid caps shown by the S&P 400 Index gained 0.49% today and 0.71% for this past week. Our small caps are shown by the S&P 600 and the Russell 2000 Indices, two different perspectives on small caps, gaining 0.60% and 0.43% respectively for today, and gaining 1.04% and 0.36% respectively for this past week. Our New York Stock Exchange Composite Index gained 0.52% today and 0.50% for this past week. Our VIX Volatility Index fell 6.02% today and fell 3.95% for this past week to close at $12.64 per VIX share. Our gold ETF gained 0.93% today and 2.23% for this past week. Our oil ETF gained 0.44% today and fell 2.77% for this past week.

Let’s move on to our Economic Calendar. We’ll go to our Daily Insights tab and our Economic Calendar sub-tab. First thing I’d like you to do is read today’s Market Reflections summary. The Market Reflection summaries summarize what’s happened this previous economic news day.

Let’s move forward to Monday, August 20. I’d like you to read our Market Focus pointers. Our Market Focus pointers give us a glimpse into the next economic day and what to expect. Also, on Monday, August 20, you’ll find our International Perspective and Simply Economics reports. These two reports are must-reads as they summarize what happened this past week on the international and domestic fronts and what to expect for the week to come. Please read these two reports, especially this weekend.

Back to today, Friday, August 17. We released our mid-month consumer sentiment numbers. Prior, we reported 97.9. Today, we reported 95.3. The conference board released their leading indicators. In June, the month-over-month change was a gain of 0.5%. In July, we’re reporting a gain of 0.6%.

Moving to the week to come. Monday will be a very quiet news day. So will Tuesday. Wednesday, Thursday, and Friday, economic news picks up. In the meantime, the market will respond to whatever transient external stochastic shock news headlines are present for the day.

Moving on to our Trading Tools tab and our Watch List’s sub-tab. Here you can find that our Options Trading candidate filter identified seven candidates. They’re all new to us. That’s why they’re highlighted in yellow. We’re going to evaluate these option trading candidates for liquidity and patterns before adding them permanently to our list.

Moving on to our Trading Tools tab and our Daily Picks sub-tab. Here you’ll find our Trading Trainer Daily Picks report generation tool. We’re going to take a look at volume and trends with our indexes. Do a deep dive. Our volume today was about the same as it was yesterday. It’s also about the same as the 50-day volume simple moving average. It’s a little bit lower, or in the case of the NASDAQ, much lower, than the 200-day volume simple moving average. The oscillator shows that it is stronger than the oscillator average, telling us that volume has been heavier in the recent days. Our short duration and long duration trends, for the most part, are neutral.

Backing us up, we’re going to turn our attention to our template algorithm filters. These mathematically go through whatever raw data we present them with and identify patterns. 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. Our trend-continuation templates are coming up somewhat benign. I can see that our long-term trend still seems to be for the most part intact, but we’re not getting any of our triggers or confirmations on these technical templates.

Moving on to our short-term trend template and our trend reversal template, we see a little bit of schizophrenia, not knowing whether we’re going up or down.

Our pattern alteration template still shows the Bollinger Band Width Indicies at fours, fives, and sixes. And our bar counters are still in double digits, telling us that the broad market is still going sideways.

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

Because it is the weekend, we’re going to start by looking at a weekly, two-year chart. As you can see the weekly, two-year chart, there is some clear channeling going on. It looks like we have a higher high after having a lower low, and so I am going to mark this as a testing bull for our weekly polarity. The volume in the last two weeks has been a little bit shy but right in line with what we would expect for our summer doldrums.

Moving onto our six-month, daily chart. You can see during this past two days, Thursday and Friday, we had some major up days. That was after Wednesday, establishing a lower low and now establishing a higher high, telling us that the polarity is testing bull. Our 30-day is pointing up. Our 50-day is pointing up. Our 200-day is pointing up. Our seven-day simple moving average is pointing up, and they are all oriented as if we’re having a bull trend.

Let’s take a look at today’s five-minute chart. As you can see from yesterday, yesterday was a gap up and then just some slight gains for the day. Today was also slight gains, a little bit more choppy.

Moving back to our daily chart. Taking some notes. We closed at $25,669.32. All other simple moving averages are oriented and pointing up. We’re testing bull and testing bull on the daily polarities and the weekly polarities respectively. We’re going to keep our trading bias on the Dow Jones Industrial Average at neutral bullish.

Moving on to the NASDAQ exchange. Starting with a weekly, two-year chart. We can see that we have found a level of resistance on the weekly chart. This week’s volume is a little bit on the weak side, more in line again with what we would expect our summer doldrums to be telling us. It’s hard to say, but we had a higher high, we have a higher low, and I’m not sure where we are right now. I think we’re still determining whether or not we’re establishing a new high or not, so we’re going to let this run a little bit more. In the meantime, we’ll keep a bullish weekly polarity.

Let’s move on to a six-month, daily chart. Here you can see our seven-day simple moving average is still oriented for a bull trend compared to the 30 and the 50 and the 200, and they are all trending up. Again, it looks like we have established some sort of level of resistance on the technology stocks. Looks like we’re trying to break through somewhere around $7,880, maybe even $7,900. Looks like $7,900 will be a significant level on the NASDAQ.

Let’s take a look at our five-minute chart. Our five-minute chart shows a very choppy set of days: Wednesday, Thursday, Friday. Very choppy, indeed.

Technology stocks taking a little bit of a breather, it seems. We closed at $7,816.33. Our previous day high is lower than the other high after a higher low, so we’re going to keep our testing bear polarity on the daily. Our trading bias for the NASDAQ, this week we downgraded it to neutral bullish.

Moving on to the S&P 500 Index, the index I feel like most represent our watch list. We’re going to start with a weekly, two-year chart. You can see that the S&P 500 has made some progress after testing a low this week. We closed at $2,850. All of our simple moving averages are pointing up on the weekly chart, and you can see that volume again is in line with summer doldrums. Nothing spectacular.

Let’s switch to our six-month, daily chart. Here you can see higher highs followed by higher lows, so our daily and weekly polarities seem to all be bullish. Our simple moving averages are pointing up. Our seven-day is oriented correctly with the others to promote a bull trend.

Going to our five-minute chart, we see just a choppy set of days after the gap up on Thursday morning.

It looks like, if I go back to my weekly chart and I look at my Fibonacci price retracement lines, it looks like $2,875 is going to be a 100% retracement, and therefore $2,950 is going to be my 123.6% retracement line, and that would be a significant line for calling our trading bias bullish. We closed at $2,850.13. Our low was $2,833.73. So I’m going to go ahead and make a note that says, “We closed above resistance.” We don’t mark a new level of support and resistance until we get a complete open-high-low-close bar closing above. Still, our trading bias here is neutral bullish. Our polarities are full on bullish. We’ll be watching closely, $2,950.

Our New York Stock Exchange Composite Index, starting with a weekly, two-year chart shows some sideways consolidation. This particular secondary index has had a harder time of showing any sort of bull trend.

Moving on to our six-month, daily chart. It’s been a choppy week for the New York Stock Exchange. In fact, the seven-day has crossed down below the 30-day. The 30-day remains trending up. The 50-day remains trending up. The 200-day remains trending up. We’re going to keep our trading bias here, though, neutral. We can’t seem to get above some key levels of resistance, let alone below some key levels of support. Our 30, 50, and 200-day simple moving averages seem to be forming a butterfly pattern, which means there’s some consolidation, maybe some confusion, maybe some misunderstanding happening in the markets right now.

Switching to our VIX Volatility Index. Looking at our 40-week simple moving average on a weekly, two-year chart, you can see that this week we popped higher than our simple moving average and then dropped lower ultimately. Implied volatility has had its ups and down in this one week.

Let’s switch to a six-month, daily chart with a 200-day simple moving average, which is analogous to our 40-week simple moving average as there are five trading days in every trading week. We can see especially on Wednesday how the implied volatility really peaked well above the mean, and then over the last two days, especially today, closed down lower. Our VIX Volatility Index fell 6.02% today to close at $12.64 per VIX share.

Our overall trading bias remains neutral bullish.

Our broad market personality, we are testing our channel top.

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, and market news including mergers and acquisitions, initial public offerings, public companies going private, and earnings.

This list of notes is in what I feel is the priority order of what affects what. So take a close look at those notes and realize that a transient external stochastic shock will have more meaning to the market right now than, say, U.S. Federal Reserve monetary policy, which in turn would have more meaning than a company going private. Keep that in mind.

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