Issue #712
Mar 21, 2021
The Oasis

Newsletter


The newsletter with chart analysis for stocks and stock indexes

Stock Indexes Analysis/Evaluation


Dichotomy or Market Correction?

DOW Friday closing price - 32627
SPX Friday closing price - 3913
NASDAQ Friday closing price - 13215

The indexes all generated negative reversal weeks with the DOW and the SPX actually doing it after making new all-time intraweek highs. This is indicative of a correction starting given that the DOW generated 10 days of higher lows than the previous day and found itself on a record amount of points of being above the 200-day MA with the previous record was trading 3886 points above the line and this week it got up to 4337 above the line. Both of these factors were indicators that either a pause in the uptrend is occurring or a correction, though possibly minor in nature. Right after the November 6th election, the DOW found itself 3790 points above the MA and in the ensuing 4 days corrected 3.7% and thereafter maintained the uptrend going but with small gains and consistent red and green daily closing. If the same occurs now as seen then, a drop down to the 31000 level is to be expected, meaning an additional 1500 points below last week's could be seen. Keep in mind that such a correction is minor in nature and does not affect the uptrend at all.

The recent dichotomy (last 5 weeks) between the DOW and the NASDAQ has continued in favor of the DOW up until Thursday. One month ago the difference between the DOW and NAZ was 17,443 points and 2 days ago it was 19,843 points with the DOW far outstripping the gains seen in the NAZ. Nonetheless, the reality is that the corrective phase that the chart suggests might be happening in the DOW may not mean that a correction will also happen in the NASDAQ because if the dichotomy goes back to what it was before with the NASDAQ outgunning the DOW as it has done for most of the past 10 years, it could mean the DOW corrects but the NAZ does not. Simply stated, this might be a correction to the dichotomy and not a correction to the entire market. This is not yet known at of this writing but the fact remains that the NASDAQ does have a pivotal daily and weekly closing support level close by at 12998 and if that does not get broken but the DOW continues lower, it is a correction to the dichotomy and not a market correction. That is likely to be known this week.

All the indexes closed near the lows of the week and further downside below last week's lows are expected to be seen this week (DOW below 32505, SPX below 3886, and NAZ below 13039). In looking at the charts, the DOW has no intraweek support below until 31285 is reached. On a daily closing basis, support is found at the previous all-time daily closing high at 31961 is reached. The SPX shows minor intraweek support at 3885 and then a bit stronger at 3805. The NASDAQ shows intraweek support between 12949 and 12985. In looking at these supports, it is clearly evident that the DOW is likely to get the bulk of selling unless this is a market correction and not a correction from the dichotomy.

To the upside, the DOW has no intraweek resistance until the all-time high at 33227 is reached. On a daily closing basis, the all-time high daily close at 33015 is decent resistance. On the intraday chart, the 200 10-minute MA is currently at 32865 and if this is a correction of the index, that line is unlikely to get broken. There is established intraday resistance at 32973 that if broken, would negate the weakness seen this past week. In the SPX, there is intraweek resistance at 3950 that if broken would negate the weakness. In the intraday chart though, the 200 10-minute MA is currently at 3946 so it is clearly evident that a rally above 3950 would be a bullish sign. In the NASDAQ, there is no intraweek resistance above until the established and pivotal resistance between 13607 and 13620 are reached. The 200 10-minute MA is currently at 13352 and there is established intraweek resistance at 13384 that if broken, would give the bulls a small edge to take the index higher.

There are no catalytic economic reports due out this week. Yes, Durable Goods and Personal Income and Spending will report this week but are highly unlikely to be catalytic for either side. As such, this week will be all about the dichotomy and about the 12998 level in the NASDAQ. The probabilities definitely favor the DOW and likely the SPX continuing lower this week but whether it is a market correction or a dichotomy correction is the question that is not yet clear.

Based on the charts of many of the held stocks, I believe it is a dichotomy correction and that there is a fair chance that the NASDAQ will rally by the end of the week and that the other indexes will close red. Either way, it is not likely to be a big week for either side.


GOLD generated another green close (2nd in a row and the first time that has happened since December) and closed in the upper half of the week's trading range, suggesting further upside above last week's high at $1757 is expected to be seen this week. The green weekly close means that the previous week's close at $1698 is now a successful retest of a pivotal area of weekly close support at $1700 and suggests that the downtrend is over for now and that a sideways trend between support at $1700 and resistance at $1800 is the most probable scenario. In using the intraweek chart, there is absolutely no resistance above until $1769 is reached and that resistance is considered minor. By the same token between $1769 and $1800 there is a mountain of resistance with the largest amount being around the $1774 level. On a daily closing basis and using the recent action (not only the one from last year), the objective is the $1769-$1772 level. A daily close above $1769 would negate the recent break that took Gold down to $1673. A daily close above $1781 would signal a break of resistance and probably further recovering and maybe even a resumption of the uptrend. That scenario does not seem probable at this time. As such, it is likely that Gold will get up to the $1770 area this week (or at the latest next week) and then correct back down to test the recent lows. One caveat to this is that this is on a closing basis. On an intraweek basis, Gold could get up as high as $1800. This scenario is expected to happen a couple of times over the next 4-8 weeks before a breakout or a breakdown can occur. Using the daily closing chart, any close below $1719 would give the bears the edge back. Probabilities favor the bulls this week.

SILVER generated a second green weekly close but in reality, nothing of consequence was achieved other than confirming the it is presently in a sideways trend and that the recent downtrend has paused if not ended. Silver did close in the upper half of the week's trading range, suggesting further upside above last week's high at 26.74 is likely to be seen this week. There is no resistance above until 27.65 is reached, meaning that like with Gold, the bulls have the edge this week. Probable upside target for this week is 27.17 where some minor intraweek resistance is found. It is not a resistance that is likely to hold up but it could take 2 weeks to get to the stronger resistance at 27.65. There is further resistance at 28.05 that could be reached but unlikely to be broken (much like Gold at $1800). If broken though, the bulls would gain a measure of control back. To the downside, there is short-term support at 25.80 that if broken would generate a bit of new selling. The 24.85 level is pivotal support. Probabilities favor the bulls this week.

OIL generated a red weekly close that caused a failure signal to be given when it closed on Friday below the 2 previous high weekly closes seen over the past 29 months at 64.00 and at 63.05. The Failure signal means that for now the uptrend is likely over and that Oil will trade sideways with perhaps a slight bias to the downside. Oil closed in the lower half of the week's trading range, suggesting further downside below last week's low at 58.33 will be seen this week. Oil was able to prevent an immediate sell signal being given when it closed at 60.00 on Thursday and then closed green on Friday. A daily close below 59.29 would have generated a sell signal and it is important to note that oil did get down to 58.33 on Thursday but found enough buying before the close to prevent the sell signal from being generated. On Friday, the bears were unable to follow through to the downside and an inside day occurred and a green weekly close. This does suggest that the first course of action for the week will be to the upside with 63.53 being the objective (based on a daily close). It is also possible that the strength will be maintained throughout the week and a close at 63.05 be seen next Friday. Nonetheless, the failure signals given does suggest that for now the uptrend is over and that the weekly close support down between 52.50 and 52.81 will now be the target to be reached sometime over the next 4-8 weeks. Probabilities favor the bulls this week but the action seen this week has now shifted the midterm edge to the bears. A weekly close next Friday above 64.00 would negate this chart evaluation. All signals have to be confirmed before the traders jump aboard.

DOLLAR generated a positive reversal week, having gone below the previous week's low and then closing green and in the upper half of the week's trading range, suggesting further upside above last week's high at 92.17 will be seen this week. Using the daily closing chart, the bulls strengthened their position given that the previous high daily close at 91.53 was tested successfully twice with closes at 91.42 and 91.44, followed by green closes the day after. Now, what appears is a successful retest of the breakout as well as a double low built on the chart. On Friday, the stock closed above the most recent high daily close at 91.86 (closed at 91.92) and that suggests the bulls will have the upper hand this week. There is intraweek resistance at 92.50 and minor but likely longer term pivotal at 92.80. If those two levels are broken, the Dollar will have negated all the weakness seen the past 5 months. Any confirmed daily close above 92.39 would mean a breakout has occurred. Any confirmed daily close below 91.42 would do the opposite. Probabilities favor the bulls.


Stock Analysis/Evaluation
CHART Outlooks

I have no new mentions this week as my portfolio is full. Nonetheless, adding positions to those held stocks is certainly something to do if the stocks give the signal that adding positions makes sense. I will be keying on that. I do recommend that if you did not get involved with any of the mentions given on the newsletter or on the message board this past week, that you check those out again as several of those stocks are still within the desired entry points given and those positions can be instituted this week if so desired. You can also check out the Held Stocks comments below and get a full explanation of what is happening in those stocks.

I do want to mention in looking at the charts of the indexes and almost all the held stocks that this week is strongly pivotal. It does slightly favor the bulls but pivotal weeks are pivotal.

Updates
Updates on Held Stocks
Closed Trades, Open Positions and Stop Loss Changes

AAPL generated a negative reversal week with a red close and near the low of the week, suggesting further downside below last week's low at 119.68 will be seen this week. If that does occur but the recent low at 116.21 is not broken, it will likely be a required/needed retest of that low and if successful, the bulls will climb aboard. The original desired entry point given was between 118.39 and 119.00 and that continues to still be the desired entry point. Stop loss at 116.11. The stock has already corrected 19.995% and a 20% correction does change the trend. With the company still being one of the strongest in the country, it would require a breakdown in the NASDAQ for that to happen. As such, watching the index is important. Resistance will now be found at last week's high at 127.22, if and when the stock does go below last week's low. Further resistance is found at 137.98, which is the mentions objective. Simply stated, if 127.22 is broken, there is mostly open air above. I do plan to add positions this week. Probabilities slightly favor the bulls.

AG generated another green weekly close (the 2nd in a row) but did close near the low of the week, suggesting further downside below last week's low at 16.61 will be seen this week. If that does happen, it likely means that a required/needed retest of the 15.13 is occurring. A drop down to the 16.00 level is possible and perhaps even likely. If you desire to add or buy new, you could buy that dip and use a stop loss at 14.90. The problem that does exist is that the upside is likely limited to a rally to the 19.29 level, meaning that a purchase around 16.00 will not offer a good risk/reward ratio. While Silver is trading sideways (probably for the next 4-8 weeks), it is unlikely the stock will get above 19.29. Probabilities do favor the bulls for a green close at the end of the week.

AU generated an uneventful inside week but did close on the low of the week, suggesting further downside below last week's low at 21.66 will be seen. The recent 11-month low at 19.55 has not yet been tested successfully and a drop below last week's low would make that happen, if and when no new low is made and the stock turns around and goes above next week's high the following week. The bears remain with the edge but Gold did confirm that a bottom to the downtrend has been found and a sister company in the Gold stock industry (NEM) is showing that higher prices are likely to be seen, meaning that the chances of this drop being a successful retest, are high. A drop all the way down to the 20.00 could be seen but the daily chart suggests it won't happen. There is support on the daily closing chart at 21.25 and that is a level that is likely to be seen this week. For the time being, the 200-day MA, currently at 25.72, is the upside objective.

BTZI generated the first green weekly close in the last 4 weeks and closed near the high of the week, suggesting further upside above last week's high at .171 will be seen this week. The green close has made the previous week's close at .134 into a successful retest of the previous and important as well as pivotal low weekly close seen in October 2017 at .1357, suggesting that a move back up to at least the .23 level is to occur. The .23 level is minor resistance though, with the .306 level being a bit stronger and the .392 level being decent resistance that would likely require further positive fundamental news to break above. By the same token, the bulls were not able to close above the 200-week MA, currently at .16 (closed at .1597), meaning there is still "some" doubt as to the upside. A close above or below that line is what this week will be all about. Probabilities do favor the bulls given that when those resistance levels mentioned above occurred was when the company was exclusively a marijuana company. With the company now into robotics and into Bitcoin, those resistance levels are not only highly viable targets to be reached but broken as well. Intraweek support is now found at .105 that if broken would weaken the chart. Probabilities favor the bulls but the stock has recently been moving up in small moves and that is likely to continue this week, unless it becomes evident that the MA line will be broken next Friday.

CNX generated a new 28-month intraweek and weekly closing high and closed near the high of the week, suggesting further upside above last week's high at 15.46 will be seen this week. There is very minor intraweek resistance at 15.51, a tiny bit stronger at 16.09 and then nothing until 17.07. There is a double top at 18.09/18.37 that will likely require positive fundamental news to break above, at least at this time. What the chart suggests will happen is a rally up to at least the 17.00 level and then a return back down to the $14 level and that being the trading range for the next few weeks or couple of months. Any rally above 17.00 should be considered a profit taking opportunity while drops back down to $14 a viable buying opportunity. The 13.83-14.03 levels are now considered support on a weekly or daily closing basis. A close below 13.83 on a weekly closing basis would be a reason to consider liquidation of positions and taking profits. Probabilities favor the bulls.

CRON generated a negative reversal week, having gone above the previous week's high and then closing red and in the lower half of the week's trading range, suggesting further downside below last week's low at 9.76 will be seen this week. Nonetheless, the stock made a new 8-week low 2 weeks ago at 8.66 which turned out to be a successful retest of the 200-week MA, currently at 8.33, and a drop below last week's low will likely turn out to be the required and needed retest of that low and of that test of the MA line. I originally mentioned a purchase of this stock to be done around the 9.70 level and a drop down to that level would fulfill the need to go below last week's low, meaning that this week the stock will give a second chance to purchase the stock at the desired entry point. I may add positions if that happens and the 9.70 is not broken. Minor intraweek resistance is found at 10.45 that if broken would suggest no further downside is to come. Short term pivotal resistance is found at 10.94 that if broken would likely thrust the stock up to 11.75 level which is midterm pivotal. A break above that level will likely take the stock to the mention's objective at 14.70. Probabilities favor the bulls.

ENG generated an uneventful inside week but did close in the lower half of the week's trading range, suggesting further downside below last week's low at 4.83 will be seen this week. Like so many of the held stocks I own, such a move will likely be the required/needed retest of the 8-week low at 3.60. If the retest is successful and the stock goes above next week's high the following week, a rally up to the recent high at 7.16 will likely occur. That resistance is somewhat minor in nature and above that, there is no resistance until the 8.80-9.40 levels are reached. The upside objective of the mention remains the $10 level. Probabilities favor the bulls.

NEM outperformed Gold and all other Gold stocks, having made a new 8-week high and then closing in the upper half of the week's trading range, suggesting further upside above last week's high at 63.63 will be seen this week. In addition, the stock confirmed the failure signal against the bears, having closed for a second week in a row above 58.48. More importantly, the stock closed above the 200-day MA, currently at 61.86 on Thursday and again on Friday, suggesting the stock is now at least in a sideways trend with a decent possibility of resuming the uptrend. Last but certainly not least, the stock is now showing a breakaway/runaway gap formation on the daily chart and if the stock can close any day this week above Thursday's close at 63.32, that gap formation will be confirmed. On a possible negative note is that on the weekly chart, only one gap is shown between 59.03 and 59.38 and if there is no second up gap seen over the next few weeks, the gap will become a magnet once Gold reaches its upside objective. What would negate that outlook, would be for the stock to get above. 65.78. My game plan right now is to take profits on at least half of my positions if the stock gets up over 64.00 and look to rebuy them back around the $59 level. Probabilities favor the bulls.

PGEN generated a negative reversal week, having gone above the previous week's high and then closing red and below the previous week's low, suggesting further downside below last week's low at 7.88 will be seen this week. The reason for the negative reversal is evident in the fact that last week's high was 9.84 and the 200-week MA is at 10.01. As such and if the stock does go below last week's low this week, this will now be the 2nd retest of that important and pivotal line. Usually, it is on the 3rd attempt that such an established downtrend line is broken. This does mean the stock will be under sell pressure this week and the bulls need to step up to the plate and defend the support level so that the bears get no new ammunition. Intraweek support is found at 7.55 and at 7.31 and if the latter breaks, the bears will gain short-term control and the buy mention will lose some credibility. The fundamentals have not changed and therefore it is likely that the stock will go below last week's low but probably not below 7.70 and begin to turn around and prepare for the 3rd attempt at breaking the downtrend line.

SRUTF once again got up to the .0485 level in a bull attempt to generate a breakout. This is the 5 time in the last 6 trading days that level has been reached and the multiple times it has gotten there, strongly suggest that level will be broken. By the same token, the pivotal level that needs to be broken for the bulls to get an edge is the .056 level. If that happens, the bulls will begin to climb aboard for a more consistent rally. In following other Cannabis stocks charts, this may be the week the stock gets above .0485 but not likely above .056. By the same token, all Cannabis stocks seem to be about 1-3 weeks away from a new breakout and if that occurs, this stock will breakout as well. Given the long amount of time it has languished at these levels, a breakout would likely cause a spike up of consequence when it happens. Pivotal intraweek resistance is found at .067 and pivotal intraweek support is found at .032. Probabilities favor more of the same thing this week but in looking at the charts of the big companies, I do believe some movement to the upside will begin within the next 1-3 weeks.

TDOC generated a negative reversal week, having gone above the previous week's high but then closing red and in the lower half of the week's trading range, suggesting further downside below last week's low at 182.22 is expected to be seen this week. This is identically the same situation being seen with so many of the held stocks where a retest of the recent low is required/needed before the bulls step back on board. The recent 17-week low is at 174.00 and any drop below last week's low would be seen as a potential retest of that low, if and when the stock goes above last week's high the following week. On a weekly closing basis, the stock remains in a strong support area between 183.07 and 189.69 that is unlikely to be broken unless some negative fundamental piece of news comes out or the indexes tank, none of which is likely to occur. The stock did generate a green daily close on Friday, making Thursday's close at 185.43 into a successful retest of the 5-month low daily close at 176.75, meaning that on a daily closing basis, the stock should not go any lower. This does not negate the possibility/probability of the stock going below last week's low at 182.22 at some point this week. Nonetheless, on a daily closing basis, there should be no further downside. A daily close above 201.24 will confirm this outlook. This is a very strong company in the health industry that has a strong future ahead and it is unlikely that a breakdown will occur. This means that if you have not purchased this stock so far, if the stock does get below 182.22 any time this week, it is a purchase. Probabilities favor the bulls.

ZLAB generated a new 4-month low week close on Friday and there is no weekly close support nearby. Nonetheless, on an intraweek basis, the stock had an inside week with a close near the low of the week, suggesting further downside below last week's low at 130.48 will be seen this week. Like with most of the held stocks, the same scenario is seen here with the stock needing a successful retest of the previous 4-month intraweek low at 127.39. As such, if the stock gets below 130.48 but does not break below 127.39 and then turns around to go above next week's high the following week, a bottom to the correction will have been found. My original mention was to buy the stock around the $129 level and use a stop loss at 124.32 and that scenario remains in place. Pivotal resistance is now found at 150.39. This is a Chinese health industry company that has appreciated 500% in value over the past 12 months. With health companies being the most likely to gain price appreciation this year, this purchase remains a value play.


1) TDOC - Purchased at 183.64. Stop loss at 173.65. Stock closed on Friday at 190.98

2) PGEN - Purchased at 8.10. No stop loss at present. Stock closed on Friday at 8.19.

3) SRUTF - Averaged long at .0738 (3 mentions). No stop loss at moment. Stock closed on Friday at .0485.

4) BTZI - Purchased at .12. Averaged long at .1225 (2 mentions). No stop loss at present. Stock closed on Friday at .1597.

5) AAPL - Purchased at 119.97. Stop loss at 116.16. Stock closed on Friday at 119.99.

6) ZLAB - Purchased at 131.18. Stop loss at 127.55. Stock closed on Friday at 132.47.

7) AU - Averaged long at 26.106 (6 mentions). No stop loss at present. Stock closed on Friday at 21.96.

8) NEM - Averaged long at 61.08 (6 mentions). No stop loss at present. Stock closed on Friday at 61.93.

9) CNX - Purchased at 14.43. Averaged long at 10.876 (3 mentions). Stop loss now at 13.68 (weekly stop close. Stock closed on Friday at 15.00.

10) RIO - Purchased at 76.15. Stop loss at 74.65. Stock closed on Friday at 76.55.

11) AG - Purchased at 16.84. Stop loss now at 15.03. Stock closed on Friday at 16.86.

12) ENG - Purchased at 5.04. Averaged long at 4.92 (2 mentions). No stop loss at present. Stock closed on Friday at 5.19.

13) RIO - Purchased at 78.50. Liquidated at 78.02. Loss on the trade of $48 per 100 shares.

14) GPS - Covered shorts at 31.49. Shorted at 30.75. Loss on the trade of $74 per 100 shares.


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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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