Issue #456
December 6, 2015
The Oasis

Newsletter


The newsletter with chart analysis for stocks and stock indexes

Stock Indexes Analysis/Evaluation


Confusion Reigns After Volatile 2-Way Trading Week.

DOW Friday closing price - 17823

The DOW generated a positive reversal week, having gone below the previous week's low and above the previous week's high and then closing in the green. The index closed near the highs of the week and further upside above last week's high at 17901 is expected to be seen this week.

The positive reversal week in the DOW was a head-scratcher inasmuch as the index was down sharply on Thursday after the ISM Index came in lower than expected on Tuesday but then up sharply on Friday after the Jobs report came in "as expected", suggesting that a strong dollar (and the safety of it) is more attractive than the negatives of a higher interest rate scenario.

To the upside, and on an intra-week basis, the DOW will show minor resistance at 17914, minor to decent at 17991 and decent between 18103 and 18137. Above that levels, there is resistance at 18288, and strong at the all-time high at 18351. Based on what happened last year, a break above 18133 would likely trigger further upside and even likely a new all-time high.

To the downside and on an intra-week basis, the DOW shows minor to decent support between 17655 and 17683 and decent as well as pivotal support at 17579 that includes the 200-day MA, currently at 17585. Below that level there is no support until 17210 is reached.

The unexpected positive action seen last week in the DOW and the lack of any reports on the economic schedule this week that could be considered negatively catalytic, suggests the bulls are likely to see follow through to the upside, make a new 19-week high, and target last year's high at 18103 that was made in December.

The price levels being seen this year in the DOW, and most specifically in December, are eerily similar to what was seen last year, with the big exception being that the index was falling "prior" to the Fed rate decision last year but is rallying "prior" to the Fed rate decision this year. Since this year it is anticipated that the Fed will raise interest rate (and that was not the case last year), the big question will be "whether the price levels or the action being seen will determine where the index will close this year". Last year the high for the year was 18103 and the close on December 31st was at 17823. Will that be the same this year and a totally non-eventful year occur or will the momentum carry the index to new all-time highs before year's end?

The answer to the question posed above is not likely to be answered this week as the traders will probably wait for the Fed decision the following week to make any longer term decisions. Nonetheless, the volatility is likely to continue and having seen a 386 point trading range this past week and 355 the previous week, the probabilities favor a trading range this week of something like 17723 to 18103.

NASDAQ Friday closing price - 5142

The NASDAQ generated a positive reversal week, having gone below the previous week's low and the closing above the previous week's high. The index closed near the highs of the week and further upside above last week's high at 5176 is likely to be seen this week.

The NASDAQ is likely to be a key this coming week, given that it is the "only" index that has been successful in generating a daily close above the November 3rd high (which has proven to be a difficult resistance level for the past 6 weeks in all indexes) and it continues to be the index that is most supported when the market is rallying. The index closed at 5142 on November 3rd and at 5147 on November 6th and at 5156 on December 1st, meaning that if the index generates a higher close above 5156 (especially if above the 5160 high daily close seen on June 23rd), the probabilities will increase that further upside will be seen and that a new all-time high will occur, likely before the end of the year.

To the upside and on an intra-week basis, the NASDAQ will show decent resistance between 5163/5176, given that there has been 4 strong high spikes in that area since June 23rd (5164 on June 24th, 5175 on August 5th, 5163 on November 3rd and 5176 on December 2nd). Based on this history, the traders have a clearly defined area of resistance, both intra-week as on a daily closing basis, to use as a guideline of what they can accomplish (or not) before the Fed rate decision on December 16th. Above that level, there is no resistance until the all-time high at 5231 (5218 on a daily closing basis) is reached. To the downside and on an intra-week basis, the NASDAQ shows minor support at 5100 and minor to perhaps decent at 5050. Below that level the 5000 demilitarize zone will be decent support, especially at the bottom of the demilitarized zone at 4970, as a break of that level on a daily closing basis would also be a break of the 200-day MA. Decent and certainly longer term pivotal support is found at 4908 that if broken would definitely give a decided edge to the bears.

The chart probabilities favor the NASDAQ continuing higher and testing the all-time high at 5231 this week. By the same token (and like with the DOW), fundamentally it does not make sense for the bulls to commit themselves to making a new high when it could all unravel if the Fed raises interest rates on December 16th. As such, I would venture to say (a guess) that the index will not follow through and that further confusion will reign at the end of the week.

One thing that can be said with some certainty about this coming week, between 5050 and 5176 the NASDAQ is in "no-man's" land where only the day and overnight trader will be having any success.

SPX Friday closing price - 2091

The SPX saw the same kind of positive reversal action and close near the highs of the week as was explained in the other indexes, meaning that further upside above last week's high at 2104 is likely to be seen. Nonetheless, I do want to mention that on a weekly closing basis, the index has closed on 6 out of the last 7 weeks within a 24 point trading range between 2075 and 2099 and the other week was a lower close, meaning that neither the bulls nor the bears have accomplished anything over this period of time, also meaning that the probabilities favor the same occurring the rest of the year, or at least until the Fed rate decision on December 16h.

The SPX is reaching a level of resistance between 2116 and the all-time high at 2134 that has been a brick wall for the past 10 months, ever since the index got up to 2119 on February of last year. With the Fed likely to raise interest rates in December and the economy at best struggling to go forward, there doesn't seem to be enough ammunition for the bulls to continue much higher. Nonetheless, if there ever was a week that could benefit the bulls, it would have to be this coming week.

To the upside and on an intra-week, the SPX shows very minor resistance at 2097, minor at 2102 and then nothing until minor to decent resistance between 2112 and 2114. Above that level, decent and likely pivotal resistance is found at recent high between 2116 and 2119 and strong at the all-time double top at 2134/2132.

To the downside and on an intra-week basis, the SPX shows minor support at 2079/2081, minor to perhaps decent between 2068 and 2070, that includes the 200-day MA, currently at 2065, minor again at 2058 and decent between 2039 and 2044. Below that level, now decent support is found at 2019.

The SPX is likely to be the most affected index if the Fed raises interest rates. It is not yet clear how it will be affected as higher interest rates could increase profitability for the financial industry but it is likely the index will show the most movement when that event occurs. As such, this week's action will likely give the traders a good clue as to what to expect the following week when the Fed announces its rate decision.


The traders received recessionary news early in the week when the ISM Index came in lower than expected and below 50, suggesting contraction in the economy is occurring. Nonetheless, the Jobs report on Friday did not confirm the slow down as the numbers came in as expected or very slightly better. The reaction to the ISM Index was negative but everything was regained back after the Jobs report, leaving the traders in a quandary as to what to expect this coming week.

The ability of the bulls to turn the market around suggests that a Fed rate hike in December has already been factored into the market and if that is the case then the action should all be positive and potentially bullish as there aren't any economic reports of importance scheduled for this week that could "turn the tide" fundamentally. Nonetheless, the market has been showing volatility and uncertainty and if the resistance levels built over the past 10-months are not broken early in the week, the volatility will return and probably back to the downside.

The key issue will remain the Fed rate decision on December 16th that should act as an inhibitor to new highs this week. Nonetheless, charts suggest the bulls will have the edge this week.

Stock Analysis/Evaluation
CHART Outlooks

There are no mentions this week, given that there is yet no clarity in the overall direction of the market and that situation should continue until the Fed rate decision comes out on December 16th. Trades under this scenario, especially in what is normally an idle month (December), are not likely to offer much profits in either direction.

Updates
Monthly & Yearly Portfolio Results
Closed Trades, Open Positions and Stop Loss Changes

Status of account for 2007: Profit of $9,758 per 100 shares after losses and commissions were subtracted.
Status of account for 2008: Profit of $14,704 per 100 shares after losses and commissions were subtracted.
Status of account for 2009: Profit of $7,523 per 100 shares after losses and commissions were subtracted.
Status of account for 2010: Profit of $24,045 per 100 shares after losses and commissions were subtracted.
Status of account for 2011: Profit of $3,616 per 100 shares after losses and commissions were subtracted.
Status of account for 2012: Profit of $3,399 per 100 shares after losses and commissions were subtracted.
Status of account for 2013: Profit of $15,886 per 100 shares after losses and commissions were subtracted.
Status of account for 2014: Profit of $21221 per 100 shares after losses and commissions were subtracted.

Status of account for 2015, as of 9/1

Profit of $10,419 using 100 shares per mention (after commissions & losses)

Closed out profitable trades for November per 100 shares per mention (after commission)

XOM (short) $659
GPS (long) $307

Closed positions with increase in equity above last months close minus commissions.

NONE

Total Profit for November, per 100 shares and after commissions $966

Closed out losing trades for November per 100 shares of each mention (including commission)

NONE

Closed positions with decrease in equity below last months close plus commissions.

HAL (short) $421

Total Loss for November, per 100 shares, including commissions $421

Open positions in profit per 100 shares per mention as of 11/30

CVX (short) $1254

Open positions with increase in equity above last months close.

KNDI (short) $36
ENG (long) $48
WMT (long) $320
QRVO (long) $2828
ARNA (long) $200

Total $4686

Open positions in loss per 100 shares per mention as of 11/30

NONE

Open positions with decrease in equity below last months close.

FSLR (long) $280
AREX (long $39
FCEL (long) $8
DXD (long) $37

Total $384

Status of trades for month of November per 100 shares on each mention after losses and commission subtractions.

Profit of $4847

Status of account/portfolio for 2015, as of 11/30

Profit of $15,266 using 100 shares traded per mention.



Updates on Held Stocks

AREX made a new all-time low weekly close on Friday, closing 1 point below the previous all-time low weekly close at 2.02. The stock closed on the lows of the week and further downside below last week's low at 1.95 is expected to be seen. Due to overproduction, oil prices remain under sell pressure and if that continues (likely), the stock will remain under sell pressure. By the same token, if the bulls can manage to generate a green weekly close next Friday, a double bottom will be built on the weekly closing chart and that should stimulate some speculative chart buying. Intra-week support is found a 1.87 and at 1.65. On a daily closing basis, support is found at 1.87 and at 1.71. A close below 1.87 any day this week would give the bears additional ammunition to take the stock lower. Pivotal resistance is now found at 2.49. Probabilities favor the bears.

ARNA generated a spike high rally on Tuesday after the FDA accepted a filing for approval for Lorcaserin (one of its drugs presently in clinical trials). Nonetheless, since it was not an approval of the drug (just of the filing) the rally fizzled out almost as fast as it began. The stock generated a buy signal on the intra-week chart when the stock got above 2.45 but the buy signal was not confirmed when the stock closed in the red that day. In fact, there is now a double high on the daily closing chart at 2.39/2.40 that looms ominous for the short-term. The stock closed on the lows of the week and further downside below last week's low at 2.03 is expected to be seen. Minor intra-week support is found at 1.98/2.00 and again at 1.94 but below that level there is no support until 1.73 is reached. Decent to strong support intra-week support is found between 1.60 and 1.66. Resistance is once again found at 2.25 and at 2.45. Nonetheless, a daily close above 2.40 would now be a short-term bullish signal. Probabilities favor the bears this week.

DXD has built decent support around the 19.30 level but the stock closed on the lows of the week and further downside below last week's low at 19.31 is expected to be seen. A new low below 19.30 by at least 10 points would be a good reason to liquidate the positions. Resistance is found at 19.82 and at 20.32. A break above 20.32 would be a positive statement that would suggest further upside would be seen. Probabilities favor the bears.

ENG generated another non-eventful trading week within the 1.00-1.31 trading range the stock seems to be stuck in at this time. The stock did close on the lows of the week and further downside below last week's low at 1.06 is expected to be seen. Support is found 1.00 and resistance at 1.31 and a weekly close above or below those levels will likely stimulate further movement in that direction. Probabilities favor more of the same.

EOG generated a new 8-week low due to oil prices being under sell pressure. Nonetheless, on a positive note the stock got down to the 200-week MA, currently at 78.60, and did bounce up a bit, meaning that attention is being given to that long-term indicator that has been meaningful since it was first reached back in July. The stock closed in the bottom half of the week's trading range, suggesting further downside below last week's low at 78.58 will be seen this week. The stock is showing a possible breakaway gap between 77.45 and 78.00 that will be a strong indicator of strength or weakness depending whether it is closed or not. The bullish flag formation remains in place but having dropped below 80.00 this week, the flag formation has weakened. Further downside below 78.50 would effectively negate the flag. Minor resistance is found at 81.18 and then nothing until 84.63-85.65 area is reached. Probabilities favor the bulls but it does seem this week could be pivotal.

FCEL announced a reverse split of 12-1 this on Friday and the stock reacted negatively to the announcement, dropping 21% in value and closing on the lows of the week, suggesting further downside below last week's low at 7.80 is expected to be seen. The all-time low is at 7.68 and the probabilities are high that level will be seen this week and if broken new selling interest would likely arise. The reverse split has opened the door for new shorts to be instituted due to the fact that the stock is now above $5, allowing the general public to put on shorts (not possible when stock was trading at $.80 cents). Previous all-time low daily close is at 8.01 and if the bulls can manage a green close on Monday it would generate a double bottom that could be bullish due to the fact there has been no change of fundamentals (only the reverse split). It is evident this week is pivotal for the stock. Daily close resistance is found at 9.17 and intra-week resistance at 10.68. Probabilities favor the bears.

FSLR made a new 7-month high this past week, having broken above the previous high at 59.85 as well as above the $60 demilitarized zone. The stock closed in the upper half of the week's trading range and further upside above last week's high at 62.05 is expected to be seen. Resistance is found between 65.50 and 65.95 and the probabilities are good the stock could get up to that level this week. Pivotal support is now found at last week's low at 56.10. Probabilities favor the bulls.

KNDI generated the second inside week in a row and closed within the $10 demilitarized zone, suggesting the traders continue to wait for a catalyst that will generate direction. Nonetheless, the stock did close near the lows of the week and further downside below last week's low at 9.77 will likely be seen this week. Short-term and pivotal intra-week support is found between 8.39-8.50 and daily close resistance is found at 10.49 and stronger at 10.91. Probabilities continue to favor the bears and will do so until a weekly close above 11.31 is seen.

QRVO generated a new 18-week intra-week and weekly closing high, as well as a close near the highs of the week, suggesting further upside above last week's high at 60.00 will be seen this week. Minor resistance is found at the bottom of the gap generated at the July earnings report at 62.35 and then nothing until daily close resistance from an important daily closing low from February at 63.74. Above that level there is no resistance until the $70 level is reached. Support is now found at 57.77 and down to 57.00 and then little until decent support at 54.07 is reached. Probabilities favor a rally up to somewhere between 62.35 and 63.74 this coming week.

WMT went below the previous week's low but then turned around to close near the highs of the week, suggesting further upside above last week's high at 60.06 will be seen this week. If that does occur, last week's low at 58.31 will become a successful and needed retest of the multi-year low seen in November at 56.30. Short-term pivotal resistance is found at 61.47 that if broken would likely carry the stock up to the objective of the mention up at the $63 level. Probabilities favor the bulls this week.


1) FCEL - Averaged long at 2.227 (4 mentions). No stop loss at present. Stock closed on Friday at .67.

2) ENG - Averaged long at 1.92 (3 mentions). No stop loss at present. Stock closed on Friday at 1.06.

3) FSLR - Averaged long at 58.21 (5 mentions). No stop loss at present. Stock closed on Friday at 59.84.

4) AREX - Averaged long at 6.013 (3 mentions). No stop loss at present. Stock closed on Friday at 2.01.

5) ARNA - Averaged long at 3.725 (4 mentions). No stop loss at present. Stock closed on Friday at 2.07.

6) WMT - Averaged long at 57.285 (2 mentions). Stop loss at 55.58. Stock closed on Friday at 59.66.

7) QRVO - Averaged long at 47.895 (2 mentions) Stop loss now at 49.65. Stock closed on Friday at 59.54.

9) KNDI - Averaged short at 9.62. No stop loss at present. Stock closed on Friday at 9.90

10) HAL - Covered shorts at 40.38. Averaged short at 39.755. Loss on the trade of $125 per 100 shares (2 mentions) plus commissions.

11) XOM - Averaged short at 84.34. Stop loss now at 83.35. Stock closed on Friday at 81.23.

12) DXD - Averaged long at 20.08. Stop loss now at 19.20. Stock closed on Friday at 19.36.

13) CVX - Covered shorts at 88.64. Averaged short at 97.69. Profit on the trade of $1810 per 100 shares (2 mentions) minus commissions.

14) XOM - Purchased at 88.62. Liquidated at 87.77. Loss on the trade of $85 per 100 shares plus commissions.


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Disclaimer

The opinions and commentaries by Mr. De Vito are not a recommendation to buy or sell, but rather a charting guideline, based on his own knowledge and experience, regarding the stocks he is following or that are brought to him by others. Mr. De Vito does not presently offer a track record of his trading experiences. No inference of success and/or failure should be assumed. The information enclosed above, regarding his background, length of trading, and experience, is correct but is not meant to suggest, state, or infer any future success in trading, based on his opinions.

The information herewith included should only be used by investors who are aware of the risk inherent in securities trading. Mr. De Vito accepts no liability whatsoever for any loss arising from any use of the information and/or comments he supplies.




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