Hi. This is A.J. Brown with Trading Trainer on the evening of Friday, July 6, 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 but 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, 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, which is July 9’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’s go to our Daily Insights tab and our Index Stats sub-tab. Our trading bias is neutral/bullish. Our industrials shown by the Dow Jones Industrial Average gained 0.41% today on light, below average New York Stock Exchange volume and gained 0.76% for this past week on light, below average New York Stock Exchange weekly volume. Our technology stocks shown by the NASDAQ Composite Index gained 1.34% today on light, below average NASDAQ Exchange volume and gained 2.37% for this past week on light, below average NASDAQ Exchange weekly volumes. Our large caps shown by the S&P 500 Index gained 0.85% today and gained 1.52% for this past week.
Moving onto our secondary indexes. Our 100 best stocks out there shown by the S&P 100 gained 0.9% today and gained 1.58% for this past week. Our mid caps shown by the S&P 400 Index gained 0.76% today and gained 1.94% for this past week. Our small caps shown by the S&P 600 and the Russell 2000, two different perspectives on small caps, gained 0.8% and 0.87% respectively for today and gained 3.2% and 3.1% respectively for this past week. Our New York Stock Exchange Composite Index gained 0.63% today and gained 1.28% for this past week. Our VIX Volatility Index fell 10.69% today and fell 16.9% for this past week. Our Gold ETF fell 0.16% today but gained 0.18% for this past week, and our oil ETF gained 1.22% for today but fell 0.66% for this past week.
Let’s take a look at our economic calendar by going 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. Then, I’d like you to fast forward to Monday, July 9’s Market Focus pointers. After reading the Market Focus pointers, I’d like you to read the once-a-week International Perspective and Simply Economics reports. These two reports are must-reads as they summarize last week’s economic news and prepare us for the week to come.
Coming back to today, Friday, July 6, our employment situation was released. Non-farm payrolls for May were 223,000. Those May numbers were revised up this time around to be 244,000, much better than previously reported. For June, we are reporting 213,000 jobs, above expectations. The unemployment rate in May was at 3.8%. In June, we are reporting 4%. Our participation rate in May was 62.7%. In June, it ticked up to 62.9%. Our average hourly earnings in May were up 0.3%. In June, they were up an additional 0.2%. Year-over-year, back in May, we reported a 2.7% average hourly earnings. In June, stayed the same, 2.7% average hourly earnings. For our work week, we reported 34.5 hours in May, and that’s what it stayed in June.
What this shows us is a couple of interesting things. Number one, employment still seems to be strong as hiring continues to increase. Even more exciting is more people are joining back into the workforce and looking for jobs. Finally, our wage inflation is staying stagnant for the time being. All of these are very positive signs for the labor force here in the US.
Our international trade numbers were reported. In April, our trade balance was down $46.2 billion. We revised that April number this time around to be a little bit better. It was a deficit of $46.1 billion. For May, we’re reporting another deficit of $43.1 billion.
Looking forward to the week to come, Monday looks like a very quiet day with consumer credit being reported towards the end of the day. We have our job opening and labor turnover survey on Tuesday. We start to see what wholesale and retail inflation is doing on Wednesday and Thursday. Then, of course, on Friday, we have our import and export prices and consumer sentiment numbers. A good dose of economic news for the week to come. Will eyes be focused on that, or will eyes continue to be focused on the trade war that’s starting to escalate? We’ll see.
Moving onto our Trading Tools tab and our Watch List sub-tab. We can see here that we have three candidates, one identified by our covered call writing candidate filter, two by our options trading candidate filter. These candidates are new to us. That’s why they are highlighted in yellow. We will evaluate them for liquidity and patterns before adding them permanently to our list.
Moving onto our Trading Tools tab and our Daily Picks sub-tab, here, you’ll find the Trading Trainer ‘Daily Picks’ report generation tool. We’ll start by taking our index tickers and doing a deeper dive by looking at volume and trends. Volume was about the same, slightly lower than it was yesterday, definitely below the 50 and 200-day simple moving averages for volume. The oscillator shows some confusing numbers, similar numbers to the oscillator average on the NASDAQ Exchange but very low numbers for the Dow. Short duration trends are neutral. Long duration trends are neutral to bullish.
Well, if we back this up, we can use our template algorithm filters. These mathematically go through whatever raw data that are presented with and look for patterns in the numbers. We’re going to present the templates with the raw data from 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. The reactive, buffered and Chaiken are all hinting, to some degree, at a long-term trend, a pullback, and in some cases, a move back up. In other words, a trend continuation pattern. Our short-term trend is showing that move up. However, we have yet to see the trend reversals confirm that movement back up. However, again, the trend reversals are no longer confirmed that we are now having a bear trend. Our Bollinger Band Width Index is still in the higher end of the scale, and our bar count is still in single digits.
Let’s go to our Trading Tools tab and our Charting sub-tab. Here, we’ll 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’m going to add my 30, 50, and 200-day simple moving averages. These lagging indicators help me determine the trend. I’ve got those 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.
We’ll start with our weekly, two-year chart. Here, you can see the sideways movement for the last months since, it looks like, the beginning of February. You can see the slight movements up and down. It looks like with this holiday week, on a very light volume, we tested the bottom. However, the light volume is not validating. We’ll need to see what happens moving forward. Still, we had a higher high, followed by a lower low, so we are testing bear in our weekly polarity. Switching to a six-month, daily chart, our 30 is clearly down. Our 50 has flattened out, and our 200 is still trending up. 30 looks to soon cross the 50. The seven has already crossed the 30 and the 50. However, it looks like it’s bottomed and may be on its way back up. It does look like we’ve formed the bottom. However, the volume is not validating that. Taking a look at our five-minute chart. Today, our price action shows a move up, and then sideways movement. Let’s look at our daily chart and take some notes. We closed at $24, 456.48. Our low is $24, 281.47. We’ll take a note, “Closed above resistance.” We won’t adjust our support and resistance values until we get a complete open-high-low-close bar above resistance. We’ve marked our 50-day as a flat trend. We have testing bear and testing bear for our weekly and daily polarities respectively. Our trading bias remains neutral.
Moving onto the NASDAQ, going to a weekly, two-year chart. Here, you can see that we continue on the long-term bull trend with higher highs and higher lows and with all of our weekly simple moving averages moving up. This week was a strong S-bar on not so validating volume. Even with the missing day and a half, it still is a light volume overall. Switching to a six-month, daily chart, our 30 and our 50 are both trending up. Our seven has bottomed and is on its way up. Again, it looks like we have found a bottom, but the volume is so light. It is not validating. Our 200 is trending up. We have a lower low after a higher high. We could soon see another higher high, which would change us from testing bear to testing bull, but for now, our polarity is testing bear. Switching to our five-minute chart, gains in the morning, sideways movement in the afternoon. We closed at $7,688.39. Our low is $7,588.65. We’ll take a note, “Close above resistance.” It looks like all of our parameters stay the same. We’ll keep our trading bias as bullish.
Let’s move onto our S&P 500 Index. This is the index, I feel like, most represents our watch list. We’ll start with a weekly, two-year chart. We have all of our long-term trends pointing up. We had an up week on light volume even when we add in the volume for one and a half missing days from the holiday. Our trading polarity remains bullish, higher high, higher low. Let’s switch to our six-month, daily chart. Here, you can see that our seven is just about ready to cross back above the 50. It doesn’t look like it’s done it quite yet. Price still looks like it has bottomed but on light volume. Our 30 remains flat, but our 50 has returned to being up. Our 200 also is trending up. Switching to a five-minute chart, gains in the morning, flat in the afternoon. Here, you’ve got the S&P 500 Index, $2,759.82. It looks like we’re going to stay just the way we’ve got it so far with a neutral/bullish trading bias.
Switching to the New York Stock Exchange Composite Index, starting with a weekly, two-year chart. It looks like we’ve got that consolidation that I’ve been talking about of the simple moving averages, even on the weekly chart. Let’s look at our daily chart, six months. The 200, the 50, and the 30-day simple moving averages are smack dab on top of each other. The consolidation pattern is clear. I’m watching this carefully. In the meantime, we’ll have a neutral trading bias.
Moving to our VIX Volatility Index starting with a weekly, two-year chart, with a 40-week simple moving average applied as a reference. We actually have pulled up on the 40-week and dropped down today, and so that’s keeping us loitering right around the simple moving average. Let’s move to a six-month, daily chart with a 200-day simple moving average, which is analogous to the 40-week simple moving average seeing as how there are five trading days in every week. Here, you can see that today, we just dipped right below the 200-day simple moving average on the VIX. Our VIX was down 10.69% to close at $13.37 per VIX share.
Our overall trading bias remains neutral/bullish.
Our broad market personality, bullish trend continuation or bearish trend reversal or sideways channel. How about we say bullish trend continuation minus confirming volume.
The market is responding to the following, including but not limited to, transient external stochastic shocks (that’s definitely going to be the trade war, if not other pieces of news), the U.S. fiscal policy, the U.S. Federal Reserve monetary policy, the monetary policies of China, Europe and Japan, the price of oil, U.S. economic news including employment, housing, manufacturing, and retail, and the market news including mergers and acquisitions (M&As), initial public offerings (IPOs), public companies going private, and earnings.
That’s all I’ve got. Please take care.