Issue #841
December 24, 2023 ,
The Oasis

Newsletter


The newsletter with chart analysis for stocks and stock indexes

Stock Indexes Analysis/Evaluation


Bulls enjoy Xmas but New Year ahead and that could be an end to the feast.

DOW Friday Closing Price - 37385
SPX Friday Closing Price - 4754
NASDAQ Friday Closing Price - 16777
RUT Friday Closing Price - 2033

The 3 main indexes continued higher but the gains were minimal, with all indexes gaining less than 1% in value. Nonetheless, it should be noted that the RUT continued to outperform the other indexes, having gained 2.4% in value this past week, and in the process, also accomplished a goal (bull objective), having made a new 16-month intraweek and weekly closing high, meaning a breakout of note.

All the indexes closed in the upper half of the week's trading range, suggesting further upside above last week's highs (DOW at 37641, SPX at 4778, NAZ at 16860 and RUT at 2042) will be seen this week. Nonetheless, the rally is now strongly overbought as the indexes have gone straight up for the past 8 weeks and given that the Xmas holiday period is over, the probabilities favor some retracement to begin occurring this week or at the latest the week after (1st week of January).

The seasonality of January has normally been a "flip of a coin" as in the last 30 years, January has been an up month 17 times and a down month 13 times. Nonetheless, January has usually been a gauge for what the market will do for the year and keeping in mind that the market has been in an uptrend since 2009 (with the exception of the pandemic year) and that we have basically seen most of the up years in the last 14 years, It seems that is now more likely that 2024 will be a down year and as such, January be a down month in 2024.

It certainly is not clear at this time but with the SPX not making a new all-time high this year (so far, with only 1 week left), in spite of the DOW and the NASDAQ doing so, and the RUT still way below its all-time, it does suggest that the bulls have run out of ammunition. In addition, the traders are actually expecting to see 7 rate cuts in 2024 and that is unlikely but even more unlikely there will be more than 7, does mean that most of the "good stuff" is already factored into the prices and as such, much more likely disappoint than pleasantly surprise (more than 7 rate cuts). This means that it is likely the very best is already in the prices and anything less than that, will cause a down year to happen.

The key to all of this is likely to be the SPX. The bulls are committed to generating a new all-time high this week or the first week of January (at the latest). The all-time intraweek high is 4818 and the all-time high weekly "and" monthly closes is 4766. The bulls have to do that this week for the monthly chart but given that the weekly chart is more indicative, they could miss it this week and then do it the first week of the New Year, If that does not happen, or a red weekly close occurs this week, the bulls will be "up a creek" and the bears will likely step up in a big way.

Neither the DOW or the NASDAQ are much in play this week as they are both substantially above their previous all-time highs. The RUT is likely to continue higher no matter what, given that if the market continues higher, it will drag the index up and if the other indexes start heading lower, traders are likely to get out of the big stocks and into the small cap stocks. This means that the SPX is "it" for the next week or two.

In looking at the daily chart of the SPX, any drop below 4736 would start giving the edge to the bears.

In looking at all charts and the November/December rally seen, the probabilities now favor the bears as the chart pattern in place is normally not supportable for upward continuation.


GOLD generated another positive week and did close in the upper half of the week's trading range, suggesting further upside above last week's high at $2082 will be seen. Nonetheless, one small negative did occur, inasmuch as on Friday and for the first few hours of trading, Gold traded above $2071, which is the all-time high weekly close) but then it fell below that starting at 10:00am and never got above that level the rest of the day. This means that the bulls had the opportunity to erase the negative drop down to $1988, which was immediately seen after the $2155 all-time intraweek high was made, but failed to confirm that by closing below that level. As stated in the past 2 newsletters, after such a sell off is seen immediately after a new all-time high is made (3 times before), Gold has rallied back as much as $96 from the low made, meaning that if this is the same situation and $1988 was the low, a rally back up to $2084 could be seen. In all 3 previous occasions, this then became a correction of note and that means that if the bulls fail to get above $2085 this week, a drop back down to at least $1960 will be seen. It is possible that there will be no follow through to the upside this week and $2082 is the rally high. A break below $2029 would make that scenario a reality. Simply stated, the $2085 and $2029 are the levels to watch this week and in the first week of January.

OIL generated follow through to the upside (above the previous week's high) and a 2nd green weekly close. Oil closed slightly above the midpoint of the week's trading range, suggesting further upside above last week's high at 75.38 will be seen this week. There was minor intraweek resistance at 75.05 that was broken and if there is follow through to the upside this week, there is open air up to the 78.22 level. Nonetheless, Oil did back off from the high of the week and did close on the low of the day on Friday, suggesting the first course of action for the week will be to the downside below Friday's low at 73.3. If 72.44 gets broken, the upside for the week will be over and more downside will be seen. As such, the 2 levels to watch this week is 72.44 and 75.38.


Stock Analysis/Evaluation
CHART Outlooks

I have no new mentions this week as I am looking to short stocks for the beginning of the year but at this time there are no signs yet that scenario will occur, meaning that any short mention at this time will be at best a 50-50 proposition, if not 40-60 as the bulls continue to have the edge. Nonetheless, if at any time during the week the charts give a sign, I will let you know on the message board or by email. I do not believe "any" signs will be given this week but I could be wrong.

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Updates
Closed Trades, Open Positions and Stop Loss Changes
BORR generated follow through to the upside and another green weekly close. Nonetheless, the stock gapped up on the weekly chart and there was no new news to support such a gap, suggesting that a drop back down to the gap at 7.09 will occur at some point soon. The stock closed exactly in the middle of the week's trading range, meaning equal chances of going above last week's high at 7.45, as going below last week's low at 7.12. If the former occurs, there is pivotal resistance at 7.61 and if the latter occurs, there is no support until 6.58 is reached. BORR is an Oil stock, so watching what Oil does will give you clues as to what the stock will do.

CPRT generated an uneventful inside week but did close red and slightly in the lower half of the week's trading range, suggesting a slightly higher probability of going below last week's low at 47.89 than above last week's high at 49.70. Pivotal support is found at 47.08 and short-term pivotal resistance is found at 50.22. The overall chart remains positive for the bulls but the lack of follow-through to the upside the past 3 weeks, in spite of the indexes going higher, does open a lot of questions as why the stock has stalled in this area. As such, this is a time to watch the action closely.

ENG generated an uneventful inside week but did close green and very slightly in the upper half of the week's trading range, suggesting a slightly higher probability of going above last week's high at 1.84 than going below last week's low at 1.68. Having said that, until the stock closes above the 2.00 level, the bears remain in control. A break below 1.66 would suggest a drop down to 1.56 would occur.

GCI continued higher and closed on the high of the week, suggesting further upside above last week's high at 2.62 will be seen this week. The stock technically generated another buy signal, having closed at 2.59 and a previous high weekly close being at 2.57. If that buy signal is confirmed next Friday, the upside objective would then be at least 3.04. The 200-week MA is currently a 3.25 and that was the mention's objective. Nonetheless and for the longer term (next 12 month), the stock could get up as high as $6. Pivotal daily close support is found between 2.30 (200-day MA) and 2.35 (previous spike low daily close). A close below 2.30 would be a short-term game changer at this time.

INTC made yet another 20-month intraweek and weekly closing high and closed on the high of the week, suggesting further upside above last week's high at 48.16 will be seen this week. There is no resistance above until the 52.51 level is reached (51.83 on a weekly closing basis). The $50 level is considered psychological resistance but this indicative breakout, which is supported by the fundamental picture, does suggest that a psychological resistance will not stop the bulls at this time. Having said that, the breakout level between 44.28 and 45.05 is highly likely to be retested before the stock can get above 52.51, meaning that if the stock gets up to (or close to) the 51.83 level, consideration should be given to taking profits and re-buying around the $45 level a few weeks from now. Ultimately, the stock is likely to get up to at least $55 with potential for even getting up as high as $63, sometime in the next 6-12 months.

LXRX generated another green weekly close (6th in a row) and closed near the high of the week, suggesting further upside above last week's high at 1.37 will be seen this week. Nonetheless and in spite of all the green closes, the upside achievements have been small and limited. Having said that, the probabilities favor the stock getting up to 1.43, this week or next, and then falling back to somewhere between 1.07-1.17. Having said that, if the bulls get above 1.43 the odds will begin to favor the bulls for more upside and if 1.51 is broken, the objective will be 1.90. This is a stock that just 4 months ago was at 1.90 and 8 months ago was at 3.78, meaning that the possibilities do exist that the stock could gain all of that back within the next 9 months. The fundamental picture has not changed dramatically, so as to support the stock staying at these lower levels. As such, the charts at this moment are not so clearly defined so as to stay that any downside of consequence will be seen.

PLNH generated a positive reversal week, having made a new 6-week low but then closing green and slightly in the upper half of the week's trading range, suggesting further upside above last week's high at .72 will be seen this week. If that occurs and the stock closes next Friday above the most recent low weekly close at .7155, a failure signal against the bears will be given, which will give the bulls new ammunition. In looking at the daily chart, any daily close above .72 will generate a new short-term buy signal, as well as a close above the 200-day MA, currently at .70, and that would offer mostly open air up to .83. The stock did have established support at .60 that might have been tested successfully, given that the low this past week was .617. If the bulls can generate the above actions, the .617 low will not only be seen as a new and dependable support level but also a sign that the low at .45 has been fully tested and a bottom formation built. It would also suggest the downside is over. Nothing is yet clear or decided but the chart is "slightly" favoring the bulls right now.

VWDRY generated a new 5-month weekly closing high and closed on the high of the week, suggesting further upside above last week's high at 9.89 will be seen this week. In addition, the stock closed above the 200-day MA, currently at 9.77 (closed at 9.86) and if that is confirmed next Friday with another green close, it will be a bullish note. More importantly for next Friday, it is the monthly close and the 23-month monthly closing high is 9.69, meaning that a close next Friday above that level would be a breakout of note. Short-term pivotal daily close support is at 9.36. If that gets broken, a drop down to at least the 8.50-8.60 level would likely be seen. A daily close above 10.36 would be a breakout as well.

ZLAB generated an unexplainable down week, having lost 18% in value (based on the daily closes). There was no negative news on the company and though the Chinese index went down, the stock has not reacted so negatively in the past when that has occurred. There was a strong increase in volume that could explain the drop based on the fact that a failure signal to the breakout occurred on Tuesday and perhaps that explains the volume increase. Nonetheless, the fundamental picture remains positive, in fact it got better given that 3 of the company's medicines are now supported fully by the government. The stock did generate a sell signal on Thursday, having closed below the 6-week low daily close on that day and then confirming the sell signal on Friday. By the same token, the exact opposite occurred the previous week to the upside, meaning that it is possible that a positive reversal may occur this week. On a positive note, there is short-term indicative and established daily close support at 25.22 and weekly close support at 25.30 and both held on Friday as the stock closed at 25.30. The stock did close on the low of the week and further downside below last week's low at 25.25 is expected to be seen on Tuesday. It is important that the bulls step up on Tuesday and generate a green daily close. Any daily close above 26.40 will defuse the negative situation. The stock did generate a breakaway and runaway gap formation that so far, has not been confirmed with news. If the stock begins to recover, both gaps will be magnets. The breakaway gap is up at 30.11. ,If that gets closed, this week's drop will be totally negated. At this time though, the bears do have the edge and the burden of proof is on the shoulders of the bulls. By the same token, this drop is so far unexplainable.


1) ZLAB - Purchased at 26.80. Averaged long at 65.50 (7 mentions). No stop loss at present. Stock closed on Friday at 25.30.

2) ENG - Averaged long at 18.30. No stop loss at present. Stock closed on Friday at 1.77.

3) VWDRY - Averaged long at 8.67 (3 mentions). Stop loss now at 9.26. Stock closed on Friday at 9.86.

4) LXRX - Averaged long at 2.495 (2 mentions). No stop loss at present. Stock closed on Friday at 1.31.

5) GCI - Purchased at 1.93. Stop loss at 1.60. Stock closed on Friday at 2.59.

6) MRNA - Liquidated at 94.87. Averaged long at 70.63. Profit on the trade of $2438 per 100 shares (2 mentions).

7) PLNH - Averaged long at 1.526 (3 mentions). No stop loss at present. Stock closed on Friday at .68.

8) SNDL - Averaged long at 9.05 (2 mentions). No stop loss at present. Stock closed on Friday at 1.54.

9) BORR - Shorted at 1.37. Stop loss at 1.66. Stock closed on Friday at 7.28. 40.90.

10) CPRT - Purchased at 48.68. No stop loss at present. Stock closed on Friday at 48.81.

11) INTC - Averaged long at 38.78 (2 mentions). Stop loss now at 37.97. Stock closed on Friday at 48.00.


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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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