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Issue #782 
September 18, 2022 | Newsletter
The newsletter with chart analysis for stocks and stock indexes |
Stock Indexes Analysis/Evaluation
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| Negative CPI report causes Indexes to turn down. Further downside expected this week.
DOW Friday closing price - 30822
The indexes generated a negative reversal week, having gone above the previous week's high and then closing below the previous week's lows (with the exception of the RUT). The NASDAQ was the leader with a 5.8% drop in price, whereas the other indexes all dropped a bit under 5%. All indexes closed near the lows of the week, suggesting further downside below last week's lows (DOW at 30550, SPX at 3837, NAZ below 11710 and the RUT below 1778) will be seen this week.
As far as the weekly closes are concerned, there was a bit of a disparity given that the DOW and the SPX broke a previous established support at 31261 and at 3901 (respectively) but the NASDAQ and the RUT did not, given that they held above their previously established support at 11835 and at 1873 (respectively). This dichotomy does suggest that the traders are still unsure of whether further downside below July's lows will be seen. The NAZ and the RUT are the more speculative indexes.
Either way, the down draft in place right now is likely to continue this week with the only thing in some doubt is "where will the indexes close next Friday". The Fed rate decision on Wednesday will have something to say about that. It is expected that the Fed will raise interest rates 75% and that has already been factored into the market. There is some talk that they may be aggressive and raise the interest rates by 100 points and if that happens, all the indexes will take a hit. Otherwise, the outlook for this week is "up in the air" (as far as where the indexes will close next Friday).
The seasonal tendency of September being a down month is likely to happen either way but by how much, is the question. In August, the indexes closed at 31510 (DOW), at 3955 (SPX), at 12272 (NAZ) and at 1844 (RUT), meaning that the probabilities are very high that the indexes will close below that level in 2 weeks (Friday September 30th). As such, any recovery seen this week or next would have to stay below those levels for the seasonal tendency to be fulfilled (highly likely). Because of this scenario, the indexes should close red on Friday, irregardless of what the Fed does this week. As such, the big question that will be in everyone's mind this week (and the next) is whether we continue to be in a bear market or simply in a midterm downtrend. The levels (on a weekly closing basis) that will decide that are in the DOW at 29888, in the SPX at 3674, in the NASDAQ at 11265 and in the RUT at 1664. Closes across the board below those levels would confirm that this is a bear market. Any index not fulfilling that scenario would suggest otherwise. It is difficult to see that happening in the SPX and the RUT and that certainly complicates matters.
One level that is highly likely to be seen in the next two weeks in the DOW and the NASDAQ is the 200-week MA, currently at 29725 and at 11134 (respectively). If that line is broken and confirmed broken the following week, it will be difficult for the bulls to say that there is no bear market in place. That is going to be a big key to it all. A drop down to that level can be on an intraweek basis (it does not have to be on a weekly closing basis).
Having said all of that, it does suggest that the bears will remain in control this week and that the following week will be the decisive week. As far as what could happen to the upside that might negate all of this, the SPX seems to be the key. The 3900 level on both the daily and weekly closing chart is pivotal. In fact, it is not only me (and my chart analysis) saying that, but the same has been stated by several market guest analysts on Bloomberg TV. If the bulls can generate a confirmed close above 3900, this chart outlook is likely to change.
Probabilities favor the bears this week.
OIL generated an inside week but it was a red weekly close and near the low of the week, suggesting further downside below last week's low at 84.27 will be seen this week. This scenario fits perfectly with the fact that the previous intraweek low was 81.20 and with the 81.07 being important and pivotal intraweek support, such a low needs to be tested but not broken. If Oil gets below 84.27 this week but does not break 81.20 and then subsequently rallies above this coming week's high, a successful retest of that low, as well as the pivotal daily and weekly closing support at 83.76 will have occurred and will give the bulls a tangible/reliable chart reason to begin a recovery phase. The probabilities do favor the 83.76 level being seen this week. It must be mentioned that the 90.37 level was an important short-term pivot point this past week and the bulls did try to break it as they rallied Oil up to 90.17. They failed but then again such a break of resistance would still have left the recent low untested and that was not what is needed. At this time though, if Oil does get below 84.27 and "then" breaks the 90.37 level, that will be a strong chart sign that the worst is over and that oil is to begin a recovery phase. If all of this happens, the 98.82 level will become the upper target for the short-to-midterm basis. No further longer term outlooks can be given at this time. More information regarding the potential depression and index action needs to occur before any new outlooks can be given. For now (the next 2-4 weeks), the probabilities favor an $84 to $98 trading range.
DOLLAR generated a positive reversal week, having made a new 3-week low but then closing green and on the high of the week, suggesting further upside above last week's high t 110.26 will be seen this week. Established but not strong weekly close resistance is found at 111.13, which is the upside target at this time. The Dollar did make a new 17-year high weekly close but only by $.03 cents (109.61 versus Friday's close at 109.64) and this does favor the bulls for more upside but does leave the door open for a double top to be created this week if the Fed rate announcement fails to give new ammunition to the bulls. With that being a total unknown at this time, no further chart outlook can be given. Nonetheless and using the daily closing chart, any close now below 108.22 would be a sign that the upside is over. Probabilities continue to favor the bulls and a rally up to the 111.13 level.
BITCOIN generated a negative reversal week, having made a new 4-week intraweek high but then closing red and near the low of the week, suggesting further downside below last week's low at 19350 will be seen this week. The inability of the bulls to get up and close above 22611 on a daily closing basis (high daily close for the week was 22395) does keep the bears with the edge and with the higher probability of a breakdown (rather than a breakout) occurring. Nonetheless, nothing was decided this past week and using the daily closing chart, the 22611 and 18790 levels are now pivotal. As of today (Saturday at 2:30 pm), Bitcoin is trading at 20087, meaning it is closer to a breakdown than to a positive semi breakout.
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Stock Analysis/Evaluation
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CHART Outlooks
At this time and until after Wednesday's Fed rate announcement, I have no new mentions. It is evident that Wednesday's announcement could be catalytic but anticipating what it will be is pure gambling. As such, I will wait until then but be prepared to receive mentions immediately thereafter.
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Updates
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| Updates on Held Stocks |
Closed Trades, Open Positions and Stop Loss Changes |
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AAPL generated a negative reversal week, having made a new 3-week and then turning around and making a new 7-week low while closing below the previous week's low and on the low of the week, suggesting further downside below last week's low at 148.37 will be seen this week. Nonetheless and having said that, the stock closed near the important weekly close pivotal level at 149.64 (closed at 150.70) that if broken would generate a failure signal against the bears and open the door for a drop to the next weekly closing support at 139.07. It would also increase the possibility of the July weekly closing low at 131.56 being tested and perhaps broken. As it is, on an intraweek basis the support at 150.10 was broken and with the stock likely to see further downside below 148.37 this week, the chances are high that the $140 level will be reached this week, at least on an intraweek basis. The close next Friday is the only thing that seems to be in question right now. At this time, there is intraweek resistance at 156.28 that if broken, it would decrease the chances of that chart outlook for $140 to be seen. Probabilities favor the bears this week. AU generated a negative reversal week as well as a new 39-month intraweek and weekly closing low. The stock closed near the low of the week and further downside below last week's low at 12.44 is expected to be seen this week. Nonetheless, the stock did close in the upper half of Friday's trading range, suggesting the first course of action for the week will be to the upside and above Friday's high at 13.21 will be seen on Monday. Much like with Gold, the break of support was damaging to the chart and does reduce the potential for any upside recovery, with the 14.85 level now becoming pivotal weekly close resistance (15.51 on a daily closing basis). To the downside and on a daily closing basis, the 11.35 level is now support. Probabilities favor the bears. BABA generated a negative reversal week and in the process made a new 6+-year weekly closing low and closed on the low of the week, suggesting further downside below last week's low at 85.42 will be seen this week. Nonetheless and on an intraweek and daily closing basis, this break of weekly close support was not confirmed as the 6+-year intraweek low is at 73.28 and there is daily close support at 76.76, at 81.09 and at 82.31. It is not surprising that a new multi-year weekly low close occurred given that there is/was a triple bottom on the chart (closes at 86.71, at 86.49, and at 86.79). Multiple bottoms are magnet for breakage when there is weakness in the market. By the same token, the break was only by $.06 as the close on Friday was at 86.43 (meaning that another potential multiple bottom may be built this week if the stock closes green next Friday. The chart does suggest that some further downside is to be seen but limited given that on the daily closing chart, the formation in place suggests that a bottom formation is occurring and that this will likely be the last phase in the process. Evidently, the September seasonal tendency has had something to do with the weakness being seen. As of today, a daily close above 88.45 would get rid of some ammunition for the bears and a daily close above 94.69 would suggest the worse is over. CAT generated a negative reversal week, having made a new 2-week high but then making a new 7-week low. The stock closed in the red and near the low of the week, suggesting further downside below last week's low at 177.77 will be seen this week. Using the weekly chart, there is no intraweek support below until the July low at 167.08 is reached. Using the daily chart, there is some intraweek support at 176.02 and then again at 169.29. The 200-week MA is currently at 168.04 and that is certainly a target for this week. To the upside, there is some possibly indicative resistance at 182.50. Reaching that level though, would get rid of the runaway gap to the downside that is found at 181.68 and the bears do not want that runaway gap to be closed. Probabilities favor the bears. ENG generated a new 6-week weekly closing low and technically gave a short-term sell signal, having closed below the most recent low weekly close at 1.49 (closed at 1.46). The stock did close on the low of the week, suggesting further downside below last week's low at 1.45 will be seen this week. Nonetheless, it does need to be mentioned that the low of the week for the past 4 week has been 1.45, meaning that on an intraweek basis, the stock has held itself at support. Nonetheless and considering what is happening in the stock index market, the probabilities do favor further downside being seen with the 200-day MA, currently at 1.28, being a viable target. Such a drop would not be a negative for the long term outlook of the stock. Intraweek resistance is now found at 1.70. If that gets broken, the bulls will be back in control. LI generated a negative reversal week of note, having gone above the previous week's high in an indicative way (after some good news about the electric car industry) but then reversing to make a new 4-month low and in the process, breaking a weekly close support level of note. I have been unable to find any fundamental reason for the negative reversal action meaning that I am at a loss to explain what happened. The stock has now given back 78.5% of the gains made in May. The stock did gap down on Friday and did close near the low of the week and further downside below last week's low at 23.70 is expected to happen. On a weekly closing basis, there is support at 23.97, at 22.17, and at 20.92 (closed on Friday at 24.09). On an intraweek basis, there is no support until 22.16 is reached. There was no news to support the gap (at 25.68), meaning that should be an upside objective for the week. Nonetheless, for any hope of this move down being negated, the stock needs to generate a daily and weekly close above 26.04. There is minor to decent daily close support at $24, suggesting that no further downside will be seen this week other than perhaps on an intraweek basis. IR generated a classic reversal week, having gone above the previous week's high but then closing below the previous week's low. In the process, a sell signal was made on both the daily and weekly closing chart, suggesting further downside is now expected to be seen. On an intraweek basis, there is no support until the 44.87/45.05 level is reached. If that support is broken, there is no support until 41.60 is reached. Below that, pivotal intraweek support is found at 39.28, which is further strengthened by the 200-week MA, currently at 39.85. The stock is now "once again" showing a negative breakaway/runaway gap with the runaway gap being at 49.12. If the gap is closed and a weekly close above 47.74 occurs, the chart outlook will change. Right now, probabilities favor the bears and a minimum drop down to 44.87. NEM went against Gold this week, having made a new 3-week high and a second green weekly close. It did close in the upper half of the week's trading range, suggesting further upside above last week's high at 44.60 will be seen this week. Any daily close above 43.95 would generate a new buy signal as well as a failure signal against the bears. A daily close above 46.55 would open the door for a rally to the $53 level. Short-term daily close support is now found at 42.40. If broken, it would take away the edge the bulls received this week. Probabilities favor the bulls. PLNHF generated a new 28-month low weekly close and closed on the low of the week, suggesting further downside below last week's low at 1.17 will be seen. Nonetheless, it does need to be mentioned that the new low weekly close was only by $.02 cents and if a green close occurs next Friday, it would be seen as a potential double bottom (rather than a break of support. On an intraweek basis, support is still found at 1.08 and for the bears to make a bear statement, that level needs to be broken. Short-term pivotal intraweek resistance is now found at 1.44. There has been no news to support this drop, meaning that it is all market related. QQQ generated a classic negative reversal week, having gone above the previous week's high and then closing below the previous week's low. The stock closed near the low of the week and further downside below last week's low at 285.62 is expected to be seen. There is no intraweek support below until the 280.21 level is reached. Below that, there is pivotal intraweek support at July's low at 269.28. The 200-week MA is currently at 271.35. Intraweek resistance is now found at 296.25. Probabilities are high that the $280 level will be reached this week. Nonetheless, thereafter it will depend on what the Fed does. SHOP generated a negative reversal week, having gone above the previous week's high and then closing red and near the low of the week, suggesting further downside below last week's low at 31.22 will be seen this week. The move down this week was not totally unexpected as a retest of the weekly close support at 31.27 was expected to be seen at some point (stock closed on Friday at 31.73). Nonetheless, I did expect the stock to rally up to the $40 level first and the only thing the bulls accomplished was a rally to 35.81 and the failure does suggest that the bears remain with the edge for not only the short-term but perhaps for the midterm. It does open the door for a new low to be made, if an when the indexes break the July lows. On a daily closing basis, the $30 demilitarized zone needs to hold. Any daily close below 29.70 would give the bears new ammunition. A rally above last week's high at 35.81 would suggest the $40 level will be reached. VET generated another red weekly close (3rd in a row) and closed near the low of the week, suggesting further downside below last week's low at 22.65 will be seen this week. Nonetheless, the bears failed to generate a sell signal, having closed on Friday at 23.13 and weekly close support being at 22.96. It is important to note that this entire area around the $23 level is pivotal, meaning that the bulls need to start generating green daily and weekly closes from here on out. On a negative note though, the stock did generate a runaway gap on Friday that if confirmed (a break below 21.41) would change the chart substantially. On the other side of the coin, closure of the gap up at 24.68 would take ammunition away from the bears and a rally above 26.10 would give the bulls back the edge. VNET got good news this past week in the form of an offer for a buyout at $8 per shares. On the news (came out Tuesday), the stock spiked up to 6.29 and held itself there the rest of the week with the traders awaiting news as to whether the buyout will be accepted or not. The stock did make a new 10-week high and buy signals were given on both the daily and weekly closing chart. The stock closed near the high of the week and further upside aboe 6.29 is expected to be seen this week. Pivotal daily close resistance is found at 6.57, which is above the highest daily close seen since May and above the 200-day MA, which is at 6.57. Daily close support is now found at 5.25. A confirmed daily close below that level would mean the good news has disappeared. ZLAB generated an uneventful inside week but did close near the low of the week, suggesting further downside below last week's low at 46.59 will be seen this week. The stock does show a gap down at 45.27 that is a magnet as it is not supported by news. Pivotal intraweek support is found at 42.66. The 200-day MA is currently at 44.95 and that is likely to be the objective this week. Pivotal resistance is now found at 53.95. The bulls remain in control.
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1) SNDL - Averaged long at 9.05 (2 mentions). No stop loss at present. Stock closed on Friday at 2.64 2) SRUTF - Averaged long at .0738 (3 mentions). No stop loss at moment. Stock closed on Friday at .0165. 3) BTZI - Averaged long at .0935 (4 mentions). No stop loss at present. Stock closed on Friday at .015. 4) ZLAB - Averaged long at 71.955 (6 mentions). No stop loss at present. Stock closed on Friday at 47.45. 5) AU - Averaged long at 26.184 (4 mentions). No stop loss at present. Stock closed on Friday at 12.85. 6) BABA - Purchased at 89.86. Stop loss at 86.61. Stock closed on Friday at 86.43. 7) NEM - Averaged long at 61.492 (5 mentions). No stop loss at present. Stock closed on Friday at 43.71. 8) ENG - Averaged long at 3.378 (5 mentions). No stop loss at present. Stock closed on Friday at 1.46. 9) VNET - Averaged long at 5.32 (2 mentions). No stop loss at present. Stock closed on Friday at 6.11. 10) AAPL - Averaged short at 158.325 (2 mentions). No stop loss at present. Stock closed on Friday at 150.70. 11) CAT - Shorted at 229.67. No stop loss at present. Stock closed on Friday at 179.47. 12) LI - Averaged long at 31.942 (4 mentions. Stop loss at 25.30. Stock closed on Friday at 24.09. 13) SHOP - Averaged long at 30.17 (2 mentions). No top loss at present. Stock closed on Friday at 31.73. 14) QQQ - Shorted at 332.82. No stop loss at present. Stock closed on Friday at 289.32. 15) BGNE - Liquidated at 155.56. Shorted at 183.20. Profit on the trade of $2774 per 100 shares. 16) IR - Averaged short at 51.715 (2 mentions). No stop loss at present. Stock closed on Friday at 47.19. 17) AAPL - Shorted at 162.59. Covered shorts at 163.56. Loss on the trade of $97 per 100 shares. 18) VET - Purchased at 23.97. No stop loss at present. Stock closed on Friday at 23.13.
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The opinions and commentaries by Mr. De Vito are not a recommendation to buy or sell, but rather
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