Broad Market Analysis – May 18, 2018

Hi team. This is A.J. Brown with Trading Trainer with your 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’re 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’re going to take a look at both daily and weekly charts.

But before looking at any charts, we’re actually going to log into the Trading Trainer ‘Learning Community’ web portal by going to login.tradingtrainer.com, and 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 tomorrow, May 21’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. 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 click on the ‘Daily Insights’ tab and the ‘Index Stats’ sub-tab. Our trading bias remains neutral. Our industrials, shown by the Dow Jones Industrial Average, closed flat this past Friday on heavy, mixed-average New York Stock Exchange volume, and closed down 0.47% for this past week on heavy, above-average New York Stock Exchange weekly volume. Our technology stocks, shown by the NASDAQ Composite Index, fell 0.38% this past Friday on flat, below-average NASDAQ exchange volume and fell 0.66% for this past week on light, mixed-average NASDAQ exchange weekly volume. The large caps shown by the S&P 500 Index fell 0.26% this past Friday and fell 0.54% this past week.

Moving on to our secondary indexes, our 100 Best Stocks out there, shown by the S&P 100 fell 0.33% this past Friday and 0.79% this past week. Our mid-caps shown by the S&P 400 Index fell 0.25% this past Friday and gained 0.22% for this past week. Our small-caps shown by the S&P 600 and the Russell 2000, two different perspectives on small-caps, gained 0.15% and edged up 0.08% respectively this past Friday and gained 1.59% and 1.23% respectively for this past week. Our New York Stock Exchange composite index fell 0.24% this past Friday and fell 0.35% for this past week. Our VIX Volatility Index edged down 0.07% this past Friday and gained 6.09% for this past week to close at 13.42. Our Gold ETF edged up 0.04% this past Friday and fell down 2.07% for this past week. Our Oil ETF fell 0.41% this past Friday and gained 1.26% for this past week.

Team, let’s take a look at our economic calendar. We’ll go to our ‘Daily Insights’ tab and our ‘Economic Calendar’ sub-tab. Looking at this past Friday, May 18, we’ll start by reading our ‘Market Reflections’ summary. After reading our ‘Market Reflections’, we’ll move to Monday, May 21, that’s tomorrow, and read our ‘Market Focus’ pointers. We will also read our two reports, namely the ‘International Perspective’ and ‘Simply Economics’ reports. These two reports are must-reads for over the weekend. They summarize the previous week of economic news and what to expect for the week to come.

Looking back at Friday, May 18, it was a quiet trading day. Mostly, investors are looking at how treasury bonds are rising in value. The US Dollar is rising in value pulling money from the equities but also giving us strength in other areas. Moving forward to Monday, May 21, another quiet day is expected. Same with Tuesday. More economic news is expected towards the end of the month and end of the week.

Moving on. Let’s take a look at our ‘Trading Tools’ tab and our ‘Watch List’ sub-tab. We have seven tickers identified by our ‘Options Trading Candidate Filter’. We will evaluate these for liquidity and patterns before adding them permanently to the list, as they are all highlighted in yellow, meaning they are all new to us.

Moving on to our ‘Trading Tools’ tab and our ‘Daily Picks’ sub-tab, here we will find the ‘Trading Trainer Daily Picks’ report generation tool. We will do a deeper dive on our indexes by taking a look at volume and trends.

Our volume on Friday was slightly higher than Thursday. About the same, slightly lower, if not much lower on the NASDAQ, than our 50-day simple moving average. About the same as the 200-day simple moving average for volume. The Oscillator shows similar, if not a little bit more, stronger than the NASDAQ for volume over the past days. Of our big three indexes, our short and long duration trends are neutral. We see a little bit of a bullish, short-term trend in the mid-caps and small-caps.

Backing this up, taking a look at our template algorithm filters, these mathematically go through whatever raw data we present them with, looking for patterns in those numbers. We’re going to present them with the raw data of our index tickers. That is going to give us an idea of what the broad market personality’s doing as well as what to look for on our watch lists. In our trend continuation trio of templates, we see a lot of neutrality. Same with our short-term trend and trend reversal duo of templates. We see a lot of up and down, maybe a slight short-term bullish trend on the small-caps. And in our pattern alteration for sideways channeling and sideways consolidating patterns, we see a lot of nothing. Bollinger Band width indexes are in the wider zone. The bar counts are in single digits.

Let’s take a look at our charts, by going to our ‘Trading Tools’ tab and our ‘Charting’ sub-tab. We’ll start with our ‘Quick Review’ chart template. This is a six-month, daily chart with a linear scale and open high-low close bars. To that, I like to add our 30, 50, and 200-day simple moving averages. These lagging indicators help us 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 this user-defined template to our indexes, specifically starting out with the Dow Jones Industrial Average. We’ll start with our weekly two-year chart.

The 30-week, 50-week, and 200-week simple moving averages continue to trend up. We have a higher low followed by a higher high, which tells me that our weekly polarity is bullish. This week’s volume is continuing to be lower. Switching to our six-month daily chart, the last four trading days have simply been sideways. Our 30-day is approaching the crossing of our 50-day. Our 30-day is trending up. Our 50-day is flat. Our 200-day is trending up. Our seven-day is trending up and is above the 30 and the 50. We closed at $24,715.09. Our polarity at this point is still with a lower low leading to a higher high meaning we’re testing bull. Let’s take a look at a five-minute chart. This past Friday was simply a sideways day.

Moving on to our NASDAQ Composite index, going to a weekly, two-year chart, it looks as though we have a higher low followed by a higher high, making our polarity bullish. Our technology stocks seem to have a more consistent volume week-to-week. Let’s move to our six-month, daily chart. Our 30 is looking to approach our 50, our seven is trending up and well above the 30 and the 50. Our 200-day simple moving average is trending up. We closed at $7,354.34. It looks as though our statistics so far stay the same. Let’s look at the five-minute chart. On Friday we see simply a sideways moving day. A little bit intra-day volatility, but not much. We opened where we closed.

Let’s move on to our S&P 500 Index. We’ll start with our weekly, two-year chart. We see that our polarity is bullish with a higher high following a higher low, but volume has been dropping week-in to week-out. It seems as almost like investors are waiting for something. Let’s move on to our six-month, daily chart. The 30-day simple moving average is coming close to crossing above the 50-day simple moving average. The 30 is trending up. The 50 is flat. The 200-day simple moving average is trending up. The seven-day simple moving average is trending up and is above the 30 and the 50. We closed at $2,712.97. All of our statistics seem the same. We are bullish in the weekly polarity and testing bull in the daily polarity. Let’s look at the five-minute chart. The five-minute chart shows that this past Friday was just a sideways day.

Let’s move on to our New York Stock Exchange Composite Index weekly, two-year chart. We see a real consolidation and we see a slightly bullish polarity. Moving to our six-month, daily chart, we see that our 30 has crossed above the 50. Our 50 is flat. Our 200-day is trending up, but they are all consolidating. Again, this is hinting to me that there is some pressure building.
Across the board, we have neutral trading biases.

Let’s take a look at our VIX Volatility Index weekly, two-year chart with a 40-week simple moving average applied. It seems our implied volatility is right at this mean. It seems to be stabilizing off at this level, which is good, rather than being ultra-low, as it has been in the past. Moving to our daily six-month chart with a 200-day simple moving average applied, we see that the implied volatility over the last week has been very stable. Our implied volatility edged down 0.07% this past Friday to close at $13.42.

Our overall trading bias does remain neutral.

Our broad market personality is sideways-channeling. We have a reversal off of horizontal resistance.

The market is responding to the following including, but not limited to: transient external stochastic shocks, the US Fiscal Policy, the US Federal Reserve monetary policy, monetary policies of China, Europe, and Japan, the price of oil, US economic news including employment, housing, manufacturing and retail, and market news, including mergers and acquisitions, initial public offerings, public companies going private and earnings.