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Issue #789 
November 6, 2022 , 2022 | Newsletter
The newsletter with chart analysis for stocks and stock indexes |
Stock Indexes Analysis/Evaluation
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| Recovery Run Over? Probably, but it won't be known until CPI report.
DOW Friday closing price - 32403
DOW, SPX and RUT all generated negative reversal weeks but the NASDAQ was not even able to go above the previous week's high, meaning it was the index showing the most weakness (DOW down 1.6%, RUT down 2.5%, SPX down 3.6% and NAZ down 7.1%). It is evident that there is a strong dichotomy going on with the safe conservative stocks (DOW) being bought, while the speculative stocks (NASDAQ) being sold. With the exception of the
The first 3 weeks of the earnings quarter are now over and the two most usually important economic reports for the month (ISM Index and Jobs)are done as well. The Fed rate decision is also now out and that leaves just one important report left to be announced, the inflation Report (CPI) that comes out Thursday morning. With such a dichotomy in place, it is likely that the inflation report is going to affect all indexes the same way (up or down), especially given that this year, and especially at this time, inflation is the #1 catalyst out there.
One further dichotomy that is in place and that further confuses the chart situation is that both the SPX and the NASDAQ have now gone below a previous week's low, meaning that technically if they rally from here, it can be said that a retest of the lows has occur. Nonetheless, that is not the same case with the DOW or the RUT as they have yet to go below a previous week's low. The fact remains that the July yearly lows have not yet seen a chart retest of them and given that the fundamental picture remains negative (no positive fundamental changes have occurred), a retest of the lows is something that happens most of the time (if not all of the time). With the DOW and RUT not having gone below a previous week's low yet, the probabilities favor that happening at some point this month. What does this mean? It likely means that no matter what the inflation reports says, the probabilities favor all the indexes heading lower and below a previous week's low at some point this month. This could mean that if the dichotomy continues, the NAZ will make a new yearly low.
In looking at the weekly closing charts, here is what I see. The DOW, with the red weekly close on Friday, has generated a successful retest of an established minor to perhaps decent resistance level between 32944 and 33212, having closed the previous week at 32861. There is a bit of room still left for a higher close but the fundamentals do not support the bulls going higher, meaning that another red close should be seen next Friday. There is no support below until 32261/32318. In addition and in favor of the bulls, any daily close above 32861 would become a confirmed break of the 200-day MA, currently at 32403 and such action would give the bulls decently strong ammunition.
In the SPX, the previous week's close at 3901, followed by a red close this past Friday, does represent a successful retest of an area of weekly close resistance between 3901 and 3924. That area has 4 previous points there (2 to the upside and 2 to the downside), meaning that any weekly close above 3901 would be a bullish sign. It is interesting to note that the same thing is seen on the daily closing chart with 4 closes between 3901 and 3911. On that chart and in looking where the index closed on Friday, there is also a lot of daily close resistance from 4 previous points, between 3785 and 3807, which basically should not be broken this week due to the close on the lower half of the week's trading range.
The NASDAQ has been the weakest of all the indexes. It did generate a failure signal the previous week, having closed above a previous and pivotal low weekly close at 11265 with a close at 11564 but that failure signal has been negated with Friday's close at 10857. In addition, the index once again closed below the 200-week MA, currently at 11295, meaning that what happens this week is pivotal. The 10692 level is strongly pivotal support on both the daily and weekly closing chart. It is the low weekly close for the year (set in July) but it was also the low daily close for the year until Thursday when it close at 10690. The index did generate a green daily close on Friday, opening the door for a double bottom on the daily closing chart at 10692/10690, which if confirmed would give the bulls new ammunition. The 11000 demilitarized zone will be resistance this week starting on Monday. Nonetheless, for the double bottom to be confirmed, the bulls would need to generated a daily close above 11669. Any daily close this week below 10690 would give the bears new and strong ammunition (closed on Friday at 10857).
One thing that is now fairly clear is that whatever action occurs this week is going to be indicative. The past few weeks there were a lot of open spaces between support and resistance where the traders could "play" without it having much meaning. That is no longer available given that the DOW has pivotal resistance nearby above and the NASDAQ has pivotal support nearby below. One or the other are likely to break.
Based on the fundamental picture, the probabilities favor the bears. Nonetheless and as you can see by the dichotomies shown, this market is split between positive thoughts on the side of the DOW and negative thoughts on the side of the NASDAQ. It is a fight rarely seen to this degree.
OIL generated a new 9-week intraweek high and a new 14-week weekly closing high and closed on the high of the week, suggesting further upside above last week's high at 92.87 will be seen this week. Oil closed above 2 previous weekly closing high resistance levels (at 91.35 and 91.55), meaning that a signal has now been given and confirmed that a bottom to the downtrend is now in place. Nonetheless, what the chart suggests is that Oil will now be in a sideways trading range between $93/$94 and $87/$88 (based on weekly closes) for possibly as long as the rest of the year. On a daily closing basis though, the chart suggests that the trading range would be between 85.48 and 95.03 ($9.50 trading range).
DOLLAR generated a negative reversal week, having gone above the previous week's high and then closing red and on the low of the week, suggesting further downside below last week's low at 110.79 will be seen this week. Nonetheless and on a weekly closing basis, it was a totally uneventful week, having closed just $.04 cents above the previous week's close. It is evident the traders are waiting for the inflation report on Thursday, and the subsequent reaction as to what the Fed is likely to do if inflation comes in higher or lower. The intraweek levels to watch at 114.78 and 109.54. Whichever gets broken is likely to generate at least a $3 move.
BITCOIN made a new 8-week intraweek high and in the process broke out of a bullish flag formation that offers an upside objective of 22400 within the next 9 trading days. Bitcoin is somewhat following what is happening to the precious metals market. On an intraweek basis, there is short term pivotal resistance at 22746, which if broken would offer an upside target of around the 24800 level. Pivotal intraweek support is found at 20055 but any daily close now below 20833 would take away some of the positives that were accomplished this week.
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Stock Analysis/Evaluation
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CHART Outlooks
Once again I have no mentions this week due to the confusion being seen with the dichotomy between the indexes. Nonetheless, it is highly likely that some decisions will be made this week after the inflation report comes out on Thursday and I will have something then. Having said that, for those of you that don't mind taking an gamble where the "chart" odds are in your favor, adding or starting a new short position on CAT makes a lot of sense. Clear intraweek resistance is found at 232.25 (stop loss would be at 232.55) and downside objective should be at the very minimum the $205 level, meaning that a sale around $229 would show a risk of about $3.45 for a profit potential of $24 per share. That is a 7-1 risk/reward ratio.
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Updates
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| Monthly & Yearly Portfolio Results
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Closed Trades, Open Positions and Stop Loss Changes
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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 2022, as of 10/1 Profit of $19,114 using 100 shares per mention (after commissions & losses) Closed out profitable trades for October per 100 shares per mention (after commission)
SHOP (short) $162
Closed positions with increase in equity above last months close minus commissions. NONE Total Profit for August, per 100 shares and after commissions $162 Closed out losing trades for October per 100 shares of each mention (including commission)
SHOP (short) $125
Closed positions with decrease in equity below last months close plus commissions. NONE Total Loss for October, per 100 shares, including commissions $125 Open positions in profit per 100 shares per mention as of 11/1
QQQ (short) $456
Open positions with increase in equity above last months close.
PLNHF (long) $60
SNDL (long) $52 NEM (long) $14 Total $1,010 Open positions in loss per 100 shares per mention as of 11/1
AAPL (short) $799
CAT (short) $1758 Open positions with decrease in equity below last months close.
AU (long) $231 Total $27,731 Status of trades for month of October per 100 shares on each mention after losses subtracted.
Loss of $26,684
Status of account/portfolio for 2022, as of 10/31
Loss of $7,570 per 100 shares.
AAPL made a new 3 week intraweek and weekly closing low and came within $.01 of making a new 19-week intraweek low and within $.18 cents of making a new 21-week weekly closing low. The stock did close in the lower half of the week's low further downside below last week's low at 134.38 is expected to be seen this week. The 138.20 to 139.07 level, based on a weekly close, is pivotal given that there are 5 different instances over the past 2 years that proved to be either pivotal resistance of pivotal support. On a daily closing basis and over the past 6 months, it is the 136.72 to 138.34 area that has proven to be pivotal. Any daily close above 146.26 would defuse the negativity of the chart. Nonetheless and at this time, the chart is definitely leaning in favor of the bears.
AU generated a buy signal on the weekly closing chart, having closed above the most recent high weekly close at 14.44 on Friday (closed at 14.63). A short-term buy signal was also given on the daily chart but the bulls fell short of accomplishing a confirming and pivotal daily close buy signal as a daily close above 14.96 is needed for that to happen. The stock did close on the high of the week, suggesting further upside above last week's high at 14.65 will be seen this week. Daily close support is now found at 13.49. A close below that level would diffuse the positives accomplished this week. A close above 14.96 would likely generate a rally up to the 16.14 level and perhaps as high as 17.57, which is where the 200-day MA is currently at. Probabilities favor the bulls. BABA, over the past 2 weeks, has rallied 18.3% from the recent multi-year low. The stock closed near the high of the week and further upside above last week's high at 71.64 is expected to be seen this week. The stock did generate a short-term buy signal on the daily closing chart, having closed above the high daily close for the past 9 trading days at 68.51 (closed on Friday at 69.81). Having said all of that, the bulls still have a lot more to do before it can be said that a bottom has been found. Using the daily closing chart, a close above 76.77 has to occur before a signal that a bottom has been found is given. Daily close support should now be found at 68.51, if and when this rally seen this week has any "legs" to it. Probabilities now slightly favor the bulls but it should be noted that on Satursday the zero-Covid restrictions were once again supported by the government, suggesting that the gains seen this past week could go away. CAT generated another green week (the 5th in a row) and closed near the high of the week, suggesting further upside above last week's high at 229.73 will be seen this week. Incredibly so, the stock has now recovered 97.1% of the drop seen since it made its all-time high weekly close at 235.08 in May 2021 (closed on Friday at 227.85). It can certainly be said that the stock has probably outperformed most other stocks in the market. Nonetheless, the stock has now reached a level of decent to strong resistance around the $230 level (based on daily closes) and between 227.81 and 228.94 (based on weekly closes). Given that it made it's 22-month weekly closing low in September at 164.08 and that there has been no retest of that weekly closing low since, it seems highly improbable that further upside will be seen without some pullback (and some form of retest of the lows) occurring first. On an intraweek basis, there is very minor support at 213.55. Below that, there is some minor to perhaps decent intraweek support at 205.50, and 199.23. The stronger and more copious intraweek support is found between 186.98 and 194.04, which does include the breakout weekly close level at 198.25, which when broken brought the stock up to the level seen this week. Nonetheless and in looking at the monthly chart, a drop all the way down to the $180 could occur. On a daily closing basis, there is decent to strong resistance at 229.80/229.85 that should not be broken. With the stock closing on Friday at 227.85, the probabilities favor a red daily close on Monday. ENG did very little this past week, having had an inside week. Nonetheless, it did close green and near the high of the week, suggesting further upside above last week's high at 1.11 will be seen this week. Short-term pivotal intraweek resistance is found at 1.14, which if broken would open the door for a rally as high as 1.32, which is where intraweek resistance is decent. The 200-day MA is currently at 1.24 and it is a pivotal area as well, given that it traded above that line for 2 months (between Aug and October). The company reports earnings on Tuesday AM and it is likely to be pivotal. Intraweek support is found at .91. Minor but likely short-term pivotal resistance is found between 1.14 and 1.16 and mid-term pivotal resistance is found at 1.45. LI generated a green close last week (first in the past 5 weeks) and closed near the high of the week, suggesting further upside above 19.21 will be seen this week. The stock appreciated 32% in value since the low was made 6 trading days ago. Nonetheless, the stock was unable to generate a clear failure signal against the bears, having closed on Friday at 18.31, only $.05 cents above the 18.26 level of previous and important weekly close support, which when broken took the stock down to making an all-time low at 12.52. With the Chinese government announcing on Saturday that the zero-Covid restrictions are to remain in place, it is unlikely that the stock will be able to rally this week and close green on Friday, in which a failure signal will be given. To the downside and on an intraweek basis, there is support at 16.86. Below that, there is none until 13.09 is reached. The stock is showing a breakaway/runaway gap formation with the runaway gap being at 17.37 and the breakaway gap at 14.51. Closure of the runaway gap would suggest the breakaway gap will be closed as well. To the upside, there is pivotal intraweek resistance at 20.49. Based on the news, the probabilities favor the bears this week. NEM generated what seems to be a potential spike low, having made a new 20-month intraweek low but then closing above the recent low weekly close at 40.74 (closed at 40.99) and also closing in the upper half of the week's trading range, suggesting further upside above last week's high at 43.24 will be seen this week. On the daily closing chart, the stock did make a new 20-month daily closing low at 37.79 but then generated a failure signal against the bears, given that it closed on Friday at 40.99. The action seen, as well as the low areas reached where support is decent and bountiful, do suggest that a bottom to this downtrend has now been found. To confirm all of this, a weekly close above 42.86 is needed. A daily close above 42.72 will likely make that happen. Daily close support should now be found at 40.26. Probabilities favor the bulls. PLNHF made a new 3-week intraweek high but even though it generated a green weekly close, it closed near the low of the week, suggesting further downside below last week's low at 1.17 will be seen this week. Nonetheless, if that does occur but the recent low at 1.03 is not broken, it could become the needed/required retest of the low that could signal that a bottom has been built to this downtrend. Short-term pivotal resistance is found at 1.36. The company reports earnings on Thursday after the close and that is likely to be pivotal. QQQ generated a red weekly close and closed in the lower half of the week's trading range, suggesting further downside below last week's low at 259.08 will be seen this week. The 28-month low weekly close made 4 weeks ago is at 260.74 (254.26 on an intraweek basis) and if those get broken this week, the previous multi-year high weekly close at 234.64 would become the objective. Very minor intraweek resistance is found at 271.81 and a bit stronger at 277.21. Evidently, the traders are waiting for the inflation report to come out on Thursday to make any decision, meaning that it is unlikely that the stock will do anything indicative until then. Chart suggests that the first resistance level will be seen and a 50-50 chance that the second resistance level is reached. VET generated a new 8-week high and did close in the upper half of the week's trading range, suggesting further upside above last week's high at 25.12 will be seen this week. Intraweek resistance is found at 25.41, at 26.02 and at 26.77. It is important to note that the stock was showing a breakaway/runaway gap formation to the downside but this last week, the runaway gap at 24.68 was closed, meaning that the breakaway gap at 28.70 has become a potential target for closure. Short-term intraweek support is now found at 22.77. Probabilities favor the bulls. VNET generated a spike-up type week, having appreciated 22% in value above the previous week's close. Talks of the buyout at $8 a share resurfaced and caused the stock to rally. The stock closed on the high of the week and further upside above last week's high at 5.84 is expected to be seen this week. Pivotal intraweek support is found at 6.02, which is broken would suggest further upside is to come. The 200-day MA is currently at 5.94 and if reached, this would be the 3rd time that line has been seen and the 3rd time is normally when a break occurs. Midterm pivotal resistance is at 6.43, which if broken would make the $8 level the objective. Intraweek support should now be found at 5.27. Probabilities favor the bulls. ZLAB generated a green weekly close (the 1st in the last 8 weeks) and did generate a failure signal against the bears, having closed above the previous multi-month low weekly close at 26.61 (closed at 30.93). A new buy signal was given on the daily chart, having broken the 3 previous high daily closes at 26.61, at 28.69 and at 29.54. The stock did close near the high of the week and further upside above last week's high at 31.22 is expected to be seen this week. Nonetheless, the news from China, regarding lifting the zero-Covid restrictions was negated and that is likely to affect the chart picture. Some intraweek support is found at 27.41 but the key level of support for the daily and weekly closing charts, is 26.61. Based on the chart, the probabilities favor the bulls. We will see how much the news that came out on Saturday about the zero-Covid restriction being maintained, affects the stock.
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1) SNDL - Averaged long at 9.05 (2 mentions). No stop loss at present. Stock closed on Friday at 2.32. 2) SRUTF - Averaged long at .0738 (3 mentions). No stop loss at moment. Stock closed on Friday at .0121. . 3) BTZI - Averaged long at .0935 (4 mentions). No stop loss at present. Stock closed on Friday at .0095. . 4) ZLAB - Averaged long at 71.955 (6 mentions). No stop loss at present. Stock closed on Friday at 30.93. 5) AU - Averaged long at 26.184 (4 mentions). No stop loss at present. Stock closed on Friday at 14.62. 6) BABA - Purchased at 89.86. No stop loss at present. Stock closed on Friday at 69.81. 7) NEM - Averaged long at 61.492 (5 mentions). No stop loss at present. Stock closed on Friday at 40.99. 8) ENG - Averaged long at 3.378 (5 mentions). No stop loss at present. Stock closed on Friday at 1.06. 9) VNET - Averaged long at 5.32 (2 mentions). No stop loss at present. Stock closed on Friday at 5.73. 10) AAPL - Averaged short at 147.90 (2 mentions). No stop loss at present. Stock closed on Friday at 138.38. 11) CAT - Averaged short at 202.826 (3 mentions). No stop loss at present. Stock closed on Friday at 227.85. 12) LI - Averaged long at 31.942 (4 mentions. No stop loss at present. Stock closed on Friday at 18.31. 13) QQQ - Shorted at 282.51. Stop loss at 284.35. Stock closed on Friday at 264.68. 14) VET - Purchased at 20.38. Stop loss at 19.65. Stock closed on Friday at 24.22.
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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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