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Issue #811 
April 30, 2023 , | Newsletter
The newsletter with chart analysis for stocks and stock indexes |
Stock Indexes Analysis/Evaluation
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| Earnings reports help the bulls rally the market and generate a positive monthly close.
DOW Friday closing price - 34098
The indexes closed out the month with small gains above the previous months closes (DOW 2.5% above, the SPX 1.5% above, and the NASDAQ .5% above). This does mean (from a technical basis) that the positive seasonal tendency of the indexes going up in April, has been fulfilled. Then again, it took two positive earnings reports on the last week of April to generate the positive close, given that all indexes were below the March closes at the beginning of the week.
One thing that does need to be mentioned and thrown into the evaluation is that the RUT actually generated a red monthly close in April (down .2%) and that means that this was not a real seasonal rally of the overall market but a rally of the elite stocks. This is strongly suggestive that the economy is not in good shape overall as the large portion of the companies are going south.
May has generally been a positive month since the uptrend began 13 years ago but prior to that, May was generally a seasonal down month and with the uptrend now gone and all the factors mentioned above "in play", I would say that the probabilities favor May being a down month this year.
The indexes did close on the highs of the week/month on Friday and further upside above last week'/months highs will be seen this week. In the DOW, that is above 34104, in the SPX that is above 4170, and in the NASDAQ that is above 13247. Nonetheless, very important reports are scheduled for this week that will impact the fundamental picture. On Monday at 10:00 am, the ISM Index report comes out. It is expected to be 46.8%. Last month it came out at 46.3%. Anything below 50 is a negative and especially below 47%, meaning that if it comes out as expected (or lower), it will not be of help to the bulls. On Wednesday, the FOMC rate decision is announced. The Fed is expected to raise interest rates another 25 points. This is an important report as there are many analysts that feel the Fed should not raise interest rates any further. Nonetheless, the probabilities do favor a raise, given that the inflation report last week was not lower and the economy is not yet showing any signs of recession, meaning that there is no tangible reason for the Fed not to do what has been scheduled for months. Raising rates by 25 points will not help the bulls. Will it be a negative? Not clear at this time.
On Thursday, AAPL reports earnings and given that it is one of the top 5 companies in the U.S., its earnings always has some impact on the market. On Friday, the Jobs report comes out. The expected number is 195k and last month it was 238k. This report will have quite a bit of impact this time as the a lower number means the economy is slowing down. Given that the Fed will already have reported their Fed decision on Wednesday, if the Fed did raise 25 points and the Non-farm payrolls are lower, that is a recipe for selling to be seen as it will mean interest rates are going higher but the economy is shrinking. That is a bad combination.
This week will be all about those reports but at the end of the week, it will be about the charts and where they close out the week. On the weekly closing chart, there are levels that will trigger new buying automatically, if and when they are broken. In the DOW that level is 34429. In the SPX that level is 4280, and in the NASDAQ that level is 13565. Those levels are 321 points above, 113 points above, and 325 points above Friday's closes (respectively). Closes above those levels would be bullish. On the other side of the coin, red closes next Friday would be a negative, especially if below 4136 in the SPX and below 13181 in the NASDAQ. As such, the probabilities strongly favor this week being the decisive factor for the action seen the next 3 months.
OIL closed the gap at 75.72 and then proceeded to close out the week very slightly in the upper half of the week's trading range, suggesting a slightly higher chance of going above last week's high at 79.17 than below last week's low at 73.93. The downside magnet (the gap) has now been removed and the chart of Oil is now fulfilled to the point that whatever happens this week is likely to be indicative. The Oil chart does give a bit more support to the bulls than the bears but like with Gold and the indexes, all of that will be decided by the economic reports this week. As has been the case for a few weeks, the upside objective is 85.41, if and when the high seen 4 weeks ago at 83.53 is broken. To the downside, things are not all that clear, basically because the OPEC production cut has given a measure of support to Oil that is unlikely to generate any downside below the recent low at 64.38. Nonetheless, a break below 72.25 will likely cause Oil to drop down to 70.11 and a break of that level would likely bring about a drop down to the $65/$66 level. Either way, the probabilities of Oil remaining in a sideways trading range for the next 3-6 months is high, with the only real question is where the bottom of that trading range is ($73, $70, or $66).
DOLLAR, based on a weekly closing basis, has had 3 totally uneventful weeks in a row, having closed at 101.55, at 101.82 and on Friday at 101.67. Nonetheless and having said that, on an intraweek chart basis, the Dollar has built what could be a support foundation or what could be a top to the action seen the next 3-6 months, depending on what happens this week. The Dollar, over the past 11-months has built the 101.67-101.93 to be a support base and as such, it has languished here in this area for the past 3 weeks as the traders await the news that is due out this week. A close next Friday below 101.67 would mean the Dollar is heading lower, while a close next Friday above 101.93 would mean that some form of recovery rally is to occur. Waiting for Friday's close might not be what you want to do and therefore, on an intraweek basis, a drop below 100.82 or above 102.23 will tip the scales in one direction or the other. Otherwise, it is all about the reports this week.
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Stock Analysis/Evaluation
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CHART Outlooks
I have no mentions this week due to the uncertainty of the situation as the traders await the important economic news that comes out this week. I did enter into all 3 mentions last week, which were in Chinese stocks that are not likely to be affected much by what happens in the U.S. market this week. As such, I have no other stocks that I have been following that meet that criteria for this week.
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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 2023, as of 4/1 Profit of $14,740 using 100 shares per mention (after commissions & losses) Closed out profitable trades for April per 100 shares per mention (after commission)
NONE
Closed positions with increase in equity above last months close minus commissions. NONE Total Profit for April, per 100 shares and after commissions $0 Closed out losing trades for April per 100 shares of each mention (including commission)
MRNA (long) $364
QQQ (short) $323 Closed positions with decrease in equity below last months close plus commissions. NONE Total Loss for April, per 100 shares, including commissions $687 Open positions in profit per 100 shares per mention as of 5/1
AMRX (long) $107
Open positions with increase in equity above last months close.
TXT (short) $369
IR (short) $116 RBLX (short) $938 AMRX (long) $108 ZLAB (long) $1032 Total $3,109 Open positions in loss per 100 shares per mention as of 5/1
IR (short) $81
BABA (long) $574 Open positions with decrease in equity below last months close.
ENG (long) $65 Total $2,574 Status of trades for month of APRIL per 100 shares on each mention after losses subtracted.
Loss of $154
Status of account/portfolio for 2023, as of 4/30
Profit of $14,586 per 100 shares.
AMRX has now fulfilled all of the mention's objectives, having closed at 1.93 on Friday and the mention giving a 1.96 objective. As such, this week is very important for the stock, as far as what to expect from here on out. The 1.96 level was a previous important daily and weekly close support that when broken, caused the stock to fall to an all-time low of 1.24. The stock has now appreciated 36% in value from that low but that was to be expected from a stock that has not reported any negative changes of fundamentals. Retesting the breakdown level was a high probability under those circumstances. Nonetheless and from here, it is all about what is expected of the company on a fundamental basis, on a future basis. The stock did close on the high of the week and further upside above last week's high at 1.97 is expected to be seen this week. Nonetheless, the bulls need to generate 2 daily closes above 1.96 in order to accomplish a failure signal against the bears. If that occurs, the immediate (1-3 weeks) objective would be 2.52. If that occurs, the 1.96 level would then become important support once again. On an intraweek basis, there is a good chance that this week, the stock could get as high as the 200-day MA, currently at 2.24. Such a rally would not be meaningful unless the bulls can close above 1.96 two days in a row. One thing that is quite clear is that the bulls are in a short-term "sink or swim" scenario where they are obligated to accomplish this scenario this week, in order for the recovery to be truly indicative. If that does not happen, a drop back down to the 1.45-1.50 level would likely be seen, and the potential for a rally thereafter would be dependent on news and even then, it would take some time to accomplish. This week is all about the bulls succeeding and if they fail, liquidating the long positions and taking profits. BABA continued lower and the bears were able to break a short-term meaningful intraweek support at 85.04, having dropped down to 82.21 this week, before any buying interest (minor) was found. The stock did close in the lower half of the week's trading range, suggesting that low will be broken this week. Nonetheless, the pivotal intraweek support is found at 79.48 and until that level is broken, the bulls will continue to have the edge. With the positive fundamental news that came out that caused the stock to rally up to 105.05, the bears do require some commensurate negative news to break that support. That is unlikely to happen. The Chinese market index could be such a "commensurate negative catalyst" but the index did get down to a support level at 19469 with a low last week at 19539 and then closed in the upper half of the week's trading range. If the bulls are able to go above last weeks' high at 20180 (closed on Friday at 19894), the chart will be fulfilled to the downside and a resumption of the uptrend will likely resume. Such action would strongly support the stock heading higher. The 200-day MA is currently at 90.61 and there is intraweek resistance at 92.92, If both are broken, new buying interest will come in. ENG was able to generate a green weekly close and did close slightly in the upper half of the week's trading range, suggesting a slightly higher chance of going above last week's high at .40 than below last week's low at .30. The green close has generated a double bottom at .30 and without any further negative news, it should be sufficient to start a recovery rally. The .404 level is pivotal short-term resistance that if broken, and the gap down at .458 is closed, would mean that the bottom to this downtrend has been found. It would also create a confirmed double bottom at the .30 level that would highly suggest that a recovery rally (perhaps even a spike rally (as this stock is famous for) would occur. Above .458, the next level is resistance is at .56. Nonetheless, the weekly chart shows open air above to the .86-1.00 level. Evidently, any drop now below .30 would be disastrous for the future of the stock/company. IR generated a positive reversal week, having made a new 5-week intraweek low and then closing above the previous week's high. The reason this occurred this week is that Stifel (rating company) upgraded their upside objective for the stock from $60 to $61. The positive reversal has re-strengthened the chart and if the recent intraweek high at 58.60 is broken, the rating objective of $61 will likely be reached. Nonetheless, on Friday, the stock closed near the low of the day and the first course of action for Monday should be to the downside with at least 56.09 likely to be seen. Like with everything else, this week's economic news will likely impact the stock. Nonetheless, consideration should be given on Monday to cover the shorts if the 56.09 level is reached. By the same token, the stock gapped up on Thursday from 54.40 and 54.54 and if the support at 55.79 is broken, that gap will become a magnet. Overall, this is not likely to be a short to hang on for more than a week or two. Based on the rating change and on the chart, this stock is not likely to get above $61 or below $52 over the next few months, meaning there is not much that can be obtained from trading the stock within that trading range. LI generated a positive reversal week, having made a new 6-week low and then closing green and on the high of the week, suggesting further upside above last week's high at 23.62 will be seen this week. If that does occur, it will make last week's low at 21.48 into a successful retest of the important and pivotal intraweek low at 20.80. In addition, it would also make last week's low into the 4th successful retest of the 12.52 low seen last October. On a bullish note, it does seem that the stock is building a pendant formation with the 26.27 level as the key level to the upside, which if broken, would offer a 41.25 upside objective. As far as support, last week's low at 21.48 is now pivotal, meaning the stop loss can now be raised to 21.48. The chart favors the bulls. PLNHF generated a green weekly close on Friday (the 2nd in the last 10 weeks) and it came with a spike-type rally early in the week when the stock moved up from .67 to .82 between Wednesday and Thursday. Nonetheless, the bulls failed to "seal the deal" on Friday as the stock closed in the lower half of the week's trading range, suggesting further downside below last week's low at .67 will be seen this week. If that occurs, this past week's rally will be meaningless. Nonetheless and using the daily chart, the stock did go below Thursday's low on Friday and if the stock turns around and goes above a previous day's high (without going below last week's low at .67), it will be seen as a required/needed retest of that multi-week low. Any daily close thereafter, above .746, would be confirmation that the bottom has been found. Such action would suggest a rally to .85 would then occur. RBLX has fallen 23% in value over the past 3 weeks and did close red and near the low of the week on Friday, suggesting further downside below last week's low at 34.52 will be seen this week. There was negative news that generated the drop, meaning that this drop has happened in spite of the rally in the index market this past week. That is indicative. Having said that, the negative news (less bookings than expected, for their services) can be temporary and as such, the traders are likely to respect the chart supports below. There is a small mountain of support, on the daily and weekly closing charts, between 34.00 and 34.68. With the stock getting down to that level this past week and then closing at .35.60, the chances are high that a positive reversal week occurs this week, meaning a drop below 34.52 and then a green close next Friday. As such, I will be looking to cover the shorts and take profits this week on a drop below 34.52. If by any chance the stock gaps down on Monday and gets below the intraweek support level at 33.68, I am likely to keep the shorts under than condition. Otherwise, I am out this week. TCEHY generated a positive reversal week, having made a new 8-week low and then turning around to close green and on the high of the week, suggesting further upside above last week's high at 44.63 will be seen this week. The stock got down to 42.13 this past week and pivotal intraweek support is found at 42.05, meaning that if it goes above last week's high this week, last week's low will be seen as a double low, thus strengthening the chart but also making that support even more pivotal. Minor but somewhat indicative resistance is found at 47.67, which if broken would give the bulls some additional ammunition. Pivotal resistance is found at 50.18. TXT generated a new 26-week intraweek low but at the end of the week, the stock rallied to close near the high of the week, suggesting further upside above last week's high at 68.33 will be seen this week. The rally was due to a better than expected earnings report and therefore, the rally needs to be respected. Nonetheless and in spite of the good news, the stock closed on Friday below the 200-day MA, currently at 67.83 (closed at 66.96), which is a line that got broken on Tuesday. The fact the better than expected earnings report did not give the bulls enough ammunition to negate that break, does suggest that perhaps the news is not all that great. After all, the stock did generate a red weekly close. Evidently, that line will be of great importance this week. Two closes in a row above the line will make last week's intraweek low at 62.82 into a spike low and give the bulls some valuable ammunition to take the stock higher. A rally above 70.10 would be an intraweek sign that the downtrend is over. By the same token, any red daily close from here on in below 68.33, would give the bears some renewed ammunition. It is evident that a close watch on this stock needs to be done this week. VET got within $.08 cents of the 15-month low at 11.93 that was seen 8 weeks ago. Nonetheless, the bulls were able to rally the stock enough to close on Friday in the middle of the week's trading range, suggesting an even chance of going above last week's high at 13.36 than below last week's low at 12.01. If the bulls are able to do that, a double bottom will be created. In addition, the 200-week MA is currently at 12.29 and that line will also have two successful retests of it. Evidently, a drop below 11.93 would now be a strong negative. The stock did spike up (4% rise) on Friday and the first course of action for the week is likely to be to the upside. As with everything else, this is a pivotal week for the stock. ZLAB generated a 2nd red week in a row and a close on the lower half of the week's trading range, suggesting further downside below last week's low at 34.23 will be seen this week. Nonetheless, the action this past week was mostly uneventful, starting with the fact that the stock generated a small $2.65 trading range (compared to what is normally the norm of about $10 weekly trading ranges), and that the stock broke no daily supports or resistances this week. This does suggest that the traders are waiting for news (such as what the Chinese market is going to do, or its earnings report due on Tuesday May 9th). On a daily closing basis, the area around 35.00 does have some short-term meaning. With the stock closing on Friday at 34.98, it would be a positive if a green daily close occurs on Monday. A daily close below 33.13 would weaken the chart, while a daily close above 36.75 (200-day MA) would strengthen the chart.
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1) ZLAB - Averaged long at 71.955 (6 mentions). No stop loss at present. Stock closed on Friday at 34.98. 2) ENG - Averaged long at 2.876 (6 mentions). No stop loss at present. Stock closed on Friday at .35. 3) RBLX - Shorted at 43.72. Stop loss now at 42.35. Stock closed on Friday at 35.60. 4) AMRX - Purchased at 1.46. Averaged long at 1.7025 (4 mentions). No stop loss at present. Stock closed at 1.93 on Friday. 5) IR - Averaged short at 56.745 (2 mentions). No stop loss at present. Stock closed on Friday at 57.02. 6) VET - Averaged long at 16.73. No stop loss at present. Stock closed on Friday at 12.67. 7) TXT - Shorted at 68.96. No stop loss at present. Stock closed on Friday at 66.94. 8) BABA - Purchased at 86.85. Averaged long at 85.05 (3 mentions). No stop loss at present. Stock closed on Friday at 84.69. 9) QQQ - Covered shorts at 322.62. Shorted at 319.39. Loss on the trade of $323 per 100 shares. 10) LI - Purchased at 21.53. Stop loss now at 21.38. Stock closed on Friday at 23.50. 11) TCEHY - Purchased at 43.23. Stop loss at 41.95. Stock closed on Friday at 44.36.
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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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