 |
 |
 |
 |
 |
 |
Issue #738 
Oct 31, 2021 | Newsletter
The newsletter with chart analysis for stocks and stock indexes |
Stock Indexes Analysis/Evaluation
|
| Bulls in Control. Confirmation is Required! Important Economic Report Week.
DOW Friday closing price - 35819
The uptrend has resumed with DOW and the SPX confirming the previous week's new all-time intraweek and weekly closing highs and the NASDAQ doing it this week. In addition, the dichotomy between the indexes in favor of the NAZ returned, with the DOW moving up an additional .5%, the SPX moving up 1.4% and the NASDAQ moving up 3.2%. It was surprising that the dichotomy resumed given that both AAPL and AMZN reported disappointing earnings results.
The dichotomy was put to the test on Friday as the NASDAQ had generated a new all-time high daily close on Thursday but opened lower Friday after those earnings reports came out. The low Friday was at 15638 and the previous all-time high weekly close was at 15652, meaning that the bears had an opportunity to negate the new all-time daily close made on Thursday and generate a failure to make a new all-time high weekly close on Friday. Nonetheless, the bears were unable to do so and the index outpaced the other indexes at the end of the day, suggesting that "nothing has changed" and the bull trend remains in place.
I had believed (up until Friday's close) that the market might be in the final phase of the bull market and that the money would be shifting to the small cap stocks. That did not happen. In fact, the RUT index (which represents small cap stocks) made a new all-time high weekly close 33 weeks ago and has not been able to break above since then, meaning that there is no suggestion yet that the market may be getting into the final phase.
What now? The NASDAQ will likely continue to be the leader to the upside for the rest of the year, unless there is some unexpected negative fundamental news that specifically affects the outlook for the tech industry. The other indexes will likely take a lesser role in the rally. The RUT will need to be watched closely from now on as that will now be the one to watch the rest of the year. The RUT closed on Friday at 2297 and its all-time high is 2360. If the dichotomy continues as is, the RUT should "not" make a new all-time high, or if it does it will because the other indexes appreciated much more and dragged it along. If the RUT does make a new high but the other indexes don't, the market will need to be re-evaluated.
Like everything that happens in the market, all breakouts and breakdowns need to be confirmed for 2 weeks in a row and that means that the bulls need to "stay on their toes" this coming week. It is an important economic report week, which could negate the breakout given that that the two most important economic reports of the month are due out. On Monday, it is the ISM Index (expected at 60.2 - last month was 61.1) and the Jobs report on Friday (expected at 450k - last month was 194k). In addition, the FOMC rate decision comes out on Wednesday and it has been said that the Fed will announce the beginning of cutting down their asset purchases. Each and every one of these reports can be catalytic, which means the breakout is still at risk of failing. Evidently, if none of these reports come out unexpectedly negative against what is expected, the chart picture outlined above will likely be accomplished.
As far as the downside is concerned for this week, the NASDAQ will also be the index to watch. The previous all-time high daily close is 15675. Any confirmed close below that level will be a negative sign. That level is 143 points below Friday's close and evidently close enough to be "in play".
Probabilities do favor the bulls though as the only thing that could derail what the bulls accomplished last week is "negative news". Chart-wise, the bulls are presently in control across the board.
SILVER, like Gold, generated an uneventful inside week. Like Gold, it is likely Silver will go below last week's low at 23.68 this week. Intraweek support is not found until the 23.00 level is reached, meaning that could be the downside objective this week. The 24.80 level is pivotal resistance. Any daily close below 22.37 would weaken the chart.
OIL generated a negative reversal week, having made a new multi-week high and the closing red. Nonetheless, Oil closed in the upper half of the week's trading range, suggesting a higher probability of going above last week's high at 85.41 and below last week's low at 80.58. The negative reversal does suggest that interest is increasing as Oil gets up to the $86-$87 level where established resistance is found. By the same token, the bounce from 80.58 also shows there is buying interest in the $79-$80 area where support is now found. The action does suggest that Oil is likely to trade between 79.67 and 86.15 (based on weekly closes) for the rest of the year, unless there is some new fundamental piece of news that comes out. Probabilities do favor the bulls this week, at least for some (but not much) further upside.
DOLLAR generated a positive reversal week, having made a new 4-week intraweek low and then going above the previous week's high at 94.17 and closing near the high of the week, suggesting further upside above last week's high at 94.30 will be seen this week. More importantly and in favor of the bulls, the double weekly closing high at 94.04/94.07 was broken as the Dollar closed on Friday at 94.12. This is a short-term statement as the multi-year weekly closing high at 94.64 is the only resistance left above before a mid-term breakout occurs. It is now likely that level will be tested this week (or the next) and that will decide what the Dollar does the rest of the year. Last week's low at 93.28 is the new intraweek pivotal support.
BITCOIN made a new all-time weekly closing high, having closed on Friday at 61803 (above the previous all-time weekly closing high at 61207). It closed near the high of the week and further upside above last week's high at 63666 is expected to be seen this week. The new all-time high weekly close is a positive but given that the previous week it made a new all-time daily closing high at 65988 and then generated a failure signal, the bulls have more to do this week before it can be considered a total win for the bulls. Probabilities do favor the bulls though.
|
Stock Analysis/Evaluation
|
CHART Outlooks
The indexes did generate a breakout across the board, suggesting that the uptrend is resuming and that the bulls remain in control. Nonetheless, there are 3 possibly catalytic economic reports this week and the resumption of the uptrend needs to be confirmed this week, meaning it is still a risk week in many ways. As such, I have no new mentions this week. Nonetheless, the mention given last week remains in place and it is likely that the desired entry point will be achieved this week. The stock mentioned has its own fundamental and chart picture that is not dependent on what the overall market does, so it does remain viable.
QTWO Friday Closing Price - 78.46
QTWO provides cloud-based digital banking solutions to regional financial institutions in the U.S. The stock started trading in March 2014 at $15 and since then it has been mostly straight up, having reached a high of 148.56 in February of this year. During this 7-year period, the stock has seen a total of 3 corrections of note, with the present correction of 50.6% being the strongest.
QTWO got down to the 200-week MA in March of last year when the market took that big downturn due to the pandemic. The MA, currently at 78.48, was once again reached the previous week with an intraweek drop to 73.51 but a positive reversal occurred and the stock closed that week at 81.59. The stock generated a negative reversal week this past week, having gone above the previous week's high but then closing red and near the low of the week, suggesting further downside below last week's low at 78.77 will be seen this week. Having been in a 37-week downtrend from the all-time high and having reached the major long term MA line, a retest of the low seen the previous week is needed/required before the bulls step in to stop the correction/midterm downtrend and begin a recovery with the possibility of resuming the uptrend that began 7 years ago. All corrections that have occurred since the company started trading have resulted in a new all-time high being made, meaning that if that pattern continues, this could be a big winning trade.
To the downside and on an intraweek basis, QTWO does not have any "established" support other than the recent low at 73.51. Nonetheless, the 200-week MA is always seen as major support unless the fundamental picture has changed and in perusing the news of the company, I see no such change having occurred, meaning that the 73.51 level has to be considered pivotal support. Using the daily chart, there is intraweek support at 76.90 and at 75.53. It is likely one (or both) of those levels will be seen this week with the former being a decent probability and the latter being only a possibility. The stock reports earning on Wednesday, November 3 and it is likely that report will be pivotal for the midterm future of the company.
To the upside and on an intraweek basis, QTWO shows minor resistance at 82.32, at 87.52, and at 92.34, with the latter being the strongest of the 3 but still not a very important or strong support. The reason for that is that the 200-day MA is currently at 102.62 and if the stock has found a bottom to the correction, a rally back up to that line is highly probable to occur. The decent to perhaps strong resistance is found at 108.89 as that has been the high over the past 7 months. That level is not likely to be broken unless the stock is looking to resume the uptrend. Then again, the 148.56 all-time high made in February has never been tested, meaning that a rally above 108.89 is not out of the question at all. This is especially considering that there was no change of fundamentals that occurred to the company to support the 50% fall in price, other than the fact that when the stock was up at that high price, many rating companies lowered the price objectives (main reason the stock fell in price). Nonetheless, this mention will not be offering a price objective above the $105 level. By the same token, with that objective, the risk/reward ratio will still be a whopping 8-1.
Purchases of QTWO around the 77.00 level and using a stop loss at 73.41 and having an objective of 105.00, offers an 8-1 risk/reward ratio. My rating on the trade is a 4.25 (on a scale of 1-5 with 5 being the highest).
|
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 2020: Loss of $16,684 per 100 shares after losses and commissions were subtracted. Status of account for 2020, as of 10/1 Profit of $3,578 using 100 shares per mention (after commissions & losses) Closed out profitable trades for October per 100 shares per mention (after commission)
ZLAB (long) $11
Closed positions with increase in equity above last months close minus commissions. CNX (long) $1579 Total Profit for October, per 100 shares and after commissions $1590 Closed out losing trades for October per 100 shares of each mention (including commission)
LNG (short) $330
ZLAB (long) $12 Closed positions with decrease in equity below last months close plus commissions.
ENB (short) $154 Total Loss for October, per 100 shares, including commissions $583 Open positions in profit per 100 shares per mention as of 10/3
CALM (long) $107
Open positions with increase in equity above last months close.
AU (long) $1494
BTZI (long) $218 Total $2338 Open positions in loss per 100 shares per mention as of 10/31
CHUY (long) $318
RIO (long) $385 Open positions with decrease in equity below last months close.
ENG (long) $172 Total $1437 Status of trades for month of October per 100 shares on each mention after losses and commission subtracted.
Profit of $1,908
Status of account/portfolio for 2021, as of 10/31
Profit of $5,486 per 100 shares.
AU got up close to the 200-day MA, currently at 20.17 (got up to 19.99) and saw selling come and turned around to close on the low of the week, suggesting further downside below last week's low at 18.47 will be seen. Downside target this week will the 200-week MA, currently at 17.62. That line was broken to the upside 4 weeks ago and has not yet been tested, meaning this move down will likely be the needed/required retest of that line before the bulls try another breakout above the 200-day MA. It is also important to note that the 18-month low at 14.54 has also not had a retest, suggesting this move down will accomplish both needs. There is minor to decent intraweek support at 18.04 that has a decent chance of holding up. As long as the stock gets below 18.47 this week, it will be seen as the needed retest.
BTZI generated an uneventful inside week but closed in the lower half of the week's trading range, suggesting further downside below last week's low at .088 will be seen this week. Then again, Bitcoin made a new all-time weekly closing high and if that is confirmed this week, it is possible (and maybe probable) that the stock will see no weakness. Important to note that the 200-day MA is currently at .0849 and the stock tested that line successfully the previous week with a low at .0855 and this week's low was .088, meaning that if the stock goes above Friday's high at .114 on Monday, that line will have been successfully tested twice and also a double low made. As such, the probabilities do favor the bulls this week. Any daily close below .08 would be a negative. CALM generated a negative reversal day on Friday, having made the high of the week at 37.00 on Friday and then going below Thursday's low and closing on the low of the day and near the low of the week, suggesting further downside below last week's low at 35.72 will be seen this week. Intraweek support is found at 35.43, which is likely to be seen this week. The turn-around from the 200-day MA is not a surprise, especially considering that there is also decent intraweek resistance between 37.17 and 37.37. During the past 23 weeks, the traders have been building a decent-to-perhaps strong support base from which to attempt a breakout above the 37.37 level. With this entire area around $35 being proven support for the past 7 years, negative fundamental news is needed to break the support and none of that seems to be "in the cards" at this time. As such, the probabilities favor the bulls. The $37 level is the pivot point on all charts. CHUY generated yet another red weekly close (5th in a row) but this time, the stock had an inside week, meaning that the bears were not able to extend the downside on an intraweek basis. In addition, the 28.82 level (on the weekly closing chart) was the breakout level from which the stock generated a rally up to 49.99 and with the stock closing on Friday at 29.19, a green close this coming Friday will be seen as a successful retest of the breakout level and give the bulls new ammunition. The stock reports earnings on Thursday afternoon and that report is likely to be pivotal. Short-term pivotal resistance is now found at 30.48 and short-term pivotal support is found at 28.48. Probabilities slightly favor the bulls. CRON failed to follow through on the previous week's green close and and get above the resistance at the 6.00 (required for new buying to come in) and ended up making another new 52-week intraweek and weekly closing low. The stock closed on the low of the week, suggesting further downside below last week's low at 5.19 will be seen. There is only one more weekkly close support below (at 5.03) before a total breakdown of the stock occurs. Below that level there is open air down to the 2.56 level. As such, the bulls find themselves in a sink or swim scenario where they need to generate some new buying in order to prevent a chart breakdown of consequence occurring. The company reports earnings a week from this coming Thursday and therefore it is unlikely that a breakdown can occur this week. The 6.00 level remains pivotal resistance. On an intraweek basis, the 4.92 level is the support level to watch this week. Probabilities are even this week. ENG generated another red weekly close (4th in a row) but the participation in the stock tumbled to a 8-week low given that the stock had the smallest trading range ($.23 cents) in 8 weeks and the 2nd smallest trading range seen in 18-months, meaning that the sellers have run out of ammunition. The stock does not report earnings until the 11th (a week from this coming Thursday) and more of the same as seen last week is expected this week. Important and decent intraweek support is found at 2.00 and short-term pivotal resistance is now found at last week's high at 2.37. On a daily closing basis, a close above 2.52 would give the edge back to the bulls and strongly suggest the downside is over. Probabilities favor more of the same this week as seen last week with perhaps a bit of an edge to the bears. MRGE went below the previous week's low this past week and that is the first time that has happened since the multi-year low at .036 was seen 9 weeks ago. The stock closed in the middle of the week's trading range, suggesting equal chances of going below last week's low at .07 and going above last week's high at .0955. If the latter happens, it will be seen as the required/needed retest of the low and new buying interest should be seen. If the former happens, the next intraweek support is at .061. The bulls have shown recently that the stock is ready to start moving higher, given that it quadrupled in value just a few weeks ago. As such, this move this past week was likely to be chart building and if so, the probabilities favor the bulls. NEM reported lower than expected earnings this past week and did spike down 6.3% in value. The stock closed on the low of the week and further downside below last week's low at 53.99 is expected to be seen this week. Nonetheless, the stock still closed above the 18-month low weekly close at 53.56 and if a green close occurs next Friday, this move down will be seen as the needed/required retest of that low. If the bulls are unable to do that, the 9-year weekly close breakout level at 52.34, seen just before the stock made a run into new all-time highs, will remain pivotal. With Gold holding on and leaning to the upside and inflation still a problem for some time to come, it is highly unlikely that a breakdown below that 9-year weekly closing high will occur. As such, I do expect buying interest to be seen this week. RIO generated an important failure signal against the bulls, having closed below the weekly close breakout level 64.42, which was the level that when broken, caused the rally up to the $95 level. Nonetheless, the chart shows 2 breakout levels with the second one being at 62.78 and that breakout level being even more important as it lasted 9 years and had two previous weekly closing highs at that price during that period of time. In addition, the 200-week MA is currently at 60.65 and there is no fundamental reason at this time for the line to be broken. Nonetheless, the failure signal given does change the chart somewhat as the 74.67 level (based on a weekly close) is now likely to be a brick wall for the next 12+ months. As such, the stock is likely to get into a trading range between $62 and $75 for the foreseeable future. With the stock closing on Friday at 63.99, it is highly likely the traders will start being buyers this week on dips down to the $62 level. SNDL generated the smallest trading range ($.035 cents) seen in the past 11 months, suggesting that there is no interest at this time in trading the stock in either direction. The stock has been stuck in "neutral" for the past 6 weeks with weekly closes at .673, .670. .681, .656, at .659 and Friday's close at .650. The company reports earnings on November 10th and until then, this sideways trading is likely to continue. The .6635 level is a proven area of support that goes back to November as that was the level that when broken to the upside, generated a move to the 2.08 level within a few months. As such and as long as no further downside on a weekly closing basis occurs, the probabilities favor the bulls overall. Minor but short-term important support is found at .61 and major support at .50. Minor but short-term pivotal resistance is found at .75 and decent at .95. As such, a .50-.95 cent trading range for the rest of the year is what is expected, with a small to decent possibility that it will be a .60 to .95 trading range. Probabilities do not favor either side this week. SRUTF generated a positive reversal week, having made a new 6-week low and the closing green and on the high of the week, suggesting further upside above last week's high at .0406 will be seen this week. Nonetheless and in looking that weekly closing chart, the stock remains in a sideways pattern much like CRON and SNDL are experiencing. The stock has been stuck in neutral for several weeks and it is not expected anything will happen until the big Cannabis stocks start making some decisive action. The high and low seen 7 weeks ago at .0505 and at .0305 remains the parameters for something happening. A break above or below the high and low seen that week will generate movement in that direction. Otherwise, the stock is likely to continue to trade within that range. ZLAB generated a green weekly close, the first in the last 8 weeks, and closed in the upper half of the week's trading range, suggesting further upside above last week's high at 105.85 will be seen this week. The company reports earnings a week from tomorrow (November 8th) and that is likely to be a catalyst. Probabilities favor the bulls this week given that the stock has dropped 36% in value over the past 7 weeks without any negative news. In addition, what the company has been working successfully on for the past year has already been lauded as breakthrough medicine that will likely generate huge increases in income when it begins to be marketed. On a weekly closing basis, the 100-week MA, currently at 105.88, is a big key (closed on Friday at 104.40). A close above that level will suggest the worst is over. On an intraweek basis, pivotal resistance is found at 107.98. If broken, there is open air on the intraweek chart to 135.65/137.20 level. The previous week's low at 97.76 is now pivotal support. Probabilities slightly favor the bulls this week.
|
1) SNDL - Averaged long at .905 (2 mentions). No stop loss at present. Stock closed on Friday at .650. 2) CHUY - Averaged long at 30.75. Stop loss now at 29.13. Stock closed on Friday at 29.16. 3) SRUTF - Averaged long at .0738 (3 mentions). No stop loss at moment. Stock closed on Friday at .039. 4) BTZI - Averaged long at .0935 (4 mentions). No stop loss at present. Stock closed on Friday at .103. 5) ZLAB - Averaged long at 125.7825 (4 mentions). No stop loss at present. Stock closed on Friday at 104.40. 6) AU - Averaged long at 26.106 (6 mentions). No stop loss at present. Stock closed on Friday at 18.40. 7) NEM - Averaged long at 60.137 (4 mentions). No stop loss at present. Stock closed on Friday at 54.00. 8) CNX - Liquidated at 15.68. Averaged long at 10.876. Profit on the trade of 1442 per 100 shares (3 mentions). 9) RIO - Purchased at 66.97. No stop loss at present. Stock closed on Friday at 63.27. 10 ENG - Averaged long at 4.0325 (4 mentions). No stop loss at present. Stock closed on Friday at 2.24. 11) CRON - Averaged long at 9.146 (3 mentions). No stop loss at present. Stock closed on Friday at 5.19. 12) MRGE - Purchased at .28. No stop loss at present. Stock closed at .083 on Friday. 13) CALM - Purchased at 34.99. Stop loss at 33.65. Stock closed on Friday at 35.95. 14) CHUY - Purchased at 31.01 and at 30.49. Averaged long at 20.75 (2 mentions). Stop loss at 28.38. Stock closed on Friday at 29.16.
Previous Newsletters
|
Encyclopedia of Chart Patterns. A must have for chart aficionados! |
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. |
|
|
|