Broad Market Analysis – May 25, 2018

Hi there. This is A.J. Brown with Trading Trainer, on the evening of Friday, May 25 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 the weekend holiday edition, we’re going to look at both daily and weekly charts.

But, before looking at any charts, we’re actually going to login to 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. Please take a look at the recommendations we have for Tuesday, May 29’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’ 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 right to our ‘Index Stats’ sub-tab under the ‘Daily Insights’ tab.

Team, our trading bias remains neutral. Our industrials shown by the Dow Jones Industrial Average fell 0.24% today, on light, below average New York Stock Exchange daily volume and gained 0.15% 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 daily volume and gained 1.08% for this past week on light, below average NASDAQ Exchange weekly volume. Our large caps, shown by the S&P 500 Index, fell 0.24% today and gained 0.31% for this past week.

Moving on to our secondary indexes, our 100 best stocks out there shown by the S&P 100 fell 0.26% today and gained 0.33% for this past week. Our mid-caps, shown by the S&P 400 Index, fell 0.24% today and gained 0.18% for this past week. Our small caps shown by the S&P 600 and Russell 2000, two different perspectives on small caps, edged down 0.05% and 0.08% respectively for today and gained 0.21% and edged up 0.02% respectively for this past week. Our New York Stock Exchange Composite Index fell 0.49% today and fell 0.65% for this past week. Our VIX Volatility Index gained 5.51% today and fell 1.49% for this past week. Our Gold ETF fell 0.31% today and gained 0.65% for this past week. And our Oil ETF fell 4.27% today and fell 5.2% 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 us to do is to take a look at today’s ‘Market Reflections’ summary. Then I’d like to take a look at Tuesday’s ‘Market Focus’ pointers. Also, you’ll notice on Monday, May 28 which is a holiday here in the United States, the ‘International Perspective’ report as well as on today, Friday, May 25, the ‘Simply Economics’ report. These two reports are must-reads for this holiday weekend edition. These two reports summarize well the economic news over the past week and what to expects for the week to come. Please read these two reports.

Durable goods orders were released today. New orders for March were at 2.6%. This time around we revised that March number to 2.7%, and we released our April number of a 1.7% decline. Now when we factor out the volatile transportation sector, in March we reported flat. We revised that flat number to be up 0.4% and our April numbers came in at a 0.9% increase. Finally, our core capital goods in March had declined by 0.1%. We revised that number to be an even bigger decline of 0.9%. For April they actually increased by 1%.

And, Consumer Sentiment was released today. The Sentiment index level for mid-May was 98.8, for the final, end of May, we’re reporting 98, a slight decline.

Remember that Monday is a US holiday, the markets will be closed. Tuesday we’ll start seeing some economic news and actually, the whole next week is economic news-rich. Let’s move on.

Let’s go to our ‘Trading Tools’ tab and our ‘Watch Lists’ sub-tab. We had three tickers identified by our options trading candidate filter today. One of them is already on our list, it’s not highlighted in yellow. The two that are highlighted in yellow are new to us. We will evaluate those for liquidity and patterns before adding them permanently to our list.

Take a look at our ‘Trading Tools’ tab and our ‘Daily Picks’ sub-tab. Here you’ll find our Trader Training ‘Daily Picks’ report generation tool. We’re going to do a deeper dive on our indexes by looking at volume and trends. The NASDAQ volume is very much lower. The Dow is about the same, slightly lower, across the board. Short duration trends are bullish, long duration trends are neutral.

Backing this up, taking 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 what the broad market personality is doing, as well as what to look for in our watch lists.

Our ‘Reactive’. ‘Buffered’ and ‘Chaiken’ are very much neutral. Our ‘Trend Reversal’ template is showing bullishness but our ‘Short Term Trend’ template is showing no trends, so we’re in a state of range contraction. Our ‘Candlestick Bar Count’ is in the double digits. Our Bollinger Band Width index is five, sixes, sevens and eights. We’re sideways channeling.

Taking a look at our charts by going to the ‘Trading Tools’ tab and our ‘Charting sub tab, starting with our ‘Quick Review’ template, which is a six month, daily chart with a linear scale and open-high-low-close bars with a separate pane for volume and volume average. And, to that, I like 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 go ahead and apply these to the indexes. Specifically starting out with the Dow Jones Industrial Average.

We will start with a weekly, two-year chart. Price hardly changed this week, neither did volume. We do have a higher high following after a higher low, so our trading polarity does remain bullish. Six month, daily chart, we have our 30-day pointing up, we have our 50-day going sideways, we have our 200-day pointing up, we have our seven-day flattening out. With our polarity, you can see a higher high, but then a lower low, so we’re testing bull. Let’s take a look at our five-minute chart. We have very little price action with regard today’s trading. Perhaps investors already left for the holiday weekend. We closed at $24,753.09 and everything else remains the same, including our neutral trading bias.

Moving on to the NASDAQ Exchange, taking a look at our weekly, two-year chart. For the week, very little price action, higher high following higher low. Going to our six month, daily chart, the seven is up, 30 is up, 50 is still flat, 200 is up. We closed at $7,433.85. So far everything is remaining the same. Looking at the five-minute chart, today was very little price action, again may be attributed to investors checking out early. Trading bias is neutral.

Taking a look at the S&P 500 Index, the index I feel most represents our watch list. Starting with a weekly, two-year chart. Again we can see a higher high after a higher low, so our trading polarity is bullish, the volume is incredibly low, price action didn’t really even occur. Switching back a six month, daily chart, price action here, of course, is also somewhat stalled. But when it comes down to it our previous high of $2,732.86 compared to our recent high of $2,742.24 means a higher high, followed by a higher low, so our polarity here is still bullish. Our 30 is up, our 50 is flat, our 200 is up, our seven is up, and the seven caught up with the price. Volume today was very low. We closed at $2,721.33. Everything else seems to be remaining the same. Today’s intraday price action hardly moved at all. Trading bias is neutral.

The New York Stock Exchange Composite Index is also going sideways. Starting with our weekly, two-year chart. Price action this week actually dipped a slight amount, still, our polarity is bullish. Switching to a six month, daily chart. The consolidation of the seven, 30, 50 and 200 is really uncanny, hinting that there’s pressure building in the market leading to some sort of break. We’re going to keep our neutral trading bias right now.

Moving onto the VIX Volatility Index, looking at the weekly, two-year chart with the 40-week simple moving average. You can see that the implied volatility is right at the simple moving average, which has been pulled up off of its low in February. Back to a six month, daily chart with a 200-day simple moving average, and again, you can see the implied volatility is right at the simple moving average. Today we were up 5.51% bringing us to $13.22.

Our overall trading bias is neutral.

Our broad market personality is sideways channeling, testing horizontal resistance.

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