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Issue #836 
November 12, 2023 , | Newsletter
The newsletter with chart analysis for stocks and stock indexes |
Stock Indexes Analysis/Evaluation
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| Bulls are off and running. Inflation Report Tuesday is the only obstacle in their way!
DOW Friday closing price - 34283
The NASDAQ made a bullish statement this week, having made a new 9-week high and more importantly, breaking the 17-week downtrend channel line convincingly. The break of that channel pattern gives an upside projection up to 16816 over a period of no more than 16 weeks. Such an objective would generate a new all-time high, above the present one at 16764.
The DOW and the SPX both made new 7-week highs but don't show a pattern formation that gives a specific upside objective for the same period of time (as the NASDAQ does). By the same token, both have quite a bit of open air above, meaning that further upside is likely to be seen this week. The DOW has open air up to 34712 (another 429 points above Friday's close) and the SPX has open air up to 4458 (another 43 points higher). The NASDAQ does have resistance at 15618 (minor) and at 15932 (decent). All 3 of these indexes closed on the highs of the week, suggesting further upside above last week's highs (DOW at 34310, SPX at 4418 and NAZ at 15535) will be seen this week.
The RUT underperformed the other indexes, having generated a red weekly close and a close near the low of the week, suggesting further downside below last week's low at 1684. Nonetheless and contrary to the other indexes, the RUT made a new 53-week low the previous week and such a scenario does require a successful retest of the lows before the bulls climb aboard. If and when that happens, the index could outperform the other indexes over the next few months, given that a recovery rally and changing of trend would likely mean the largest portion of investment dollars would likely flow into the still oversold and undervalued small-cap stocks.
This week the inflation report is due out on Tuesday and Retail Sales on Wednesday. The inflation core number is expected to remain unchanged from the previous month at .3% and Retail Sales is expected to show a big drop from the previous month, given that expectations are for a -.2% report coming out and last month was +.7%. If inflation does come in lower and Retail Sales comes in higher, it should give the bulls more ammunition this week.
Once again, the index to watch this week is the NASDAQ. There is decent weekly close resistance between 15652 and 15750. Those two levels represent a previous high weekly close made in August 2021 (former) and the 8-month weekly closing high (latter) seen in July of this year, which was this year's uptrend high weekly close. Between those two, there is a third weekly close at 15712, which was the weekly closing low made after the all-time high was made and as such, became pivotal support for the uptrend. When that level was broken, the index got into a downtrend that ended 10 months later at 10692. With the index having closed at 15529 on Friday, it means that any green close next Friday of over 221 points would be a breakout of consequence that would make the all-time high a target for breakage.
As far as the downside is concerned, here are the levels of weekly close support that if broken, would change the outlook. In the DOW that level is at 33670, in the SPX that level is at 4288, in the NASDAQ that level is at 14995 and in the RUT that level is at 1636 (though a weekly close below 1664 would be a decent negative.
Evidently, the big key this week will be the inflation report on Tuesday. A higher number than expected would suggest that the momentum to the upside could sputter. If that does not happen, I do expect those resistance levels above to be at least tested this week.
OIL generated a new 16-week low 9-week intraweek and weekly closing low and closed in the lower half of the week's trading range, suggesting that further downside below last week's low at 74.94 will be seen this week. In the process, a new sell signal and a new failure signal against-the-bulls was given on the weekly closing chart. This does (in effect) state that the uptrend with a $100 objective is over for the rest of the year. Having said that, Oil did generate 2 green daily closes on Thursday and Friday and a close near the high of the day on Friday, suggesting the first course of business for the week will be to the upside and above Friday's high at 77.93. There is daily close resistance at 78.89 and again at 80.48. The 78.89 level is likely to be seen on Monday and a close around there occur that same day. The inflation report on Tuesday is likely to either generate the downside again or a rally up to the 80.48 level. Either way, Oil is now on a short-term downtrend that is likely to take it down to the 72.50 level, which is where some decent weekly close support is found. Probabilities favor Oil trading between $73 and $80 for the next few week, with a slight possibility of extending the range to the downside to $70 and the range to the upside to $85. I doubt that either of those two levels will be broken until next year.
DOLLAR. I have decided that for now, I will not to continue to give chart evaluations on the Dollar. The Fed is not likely to do anything for at least the next 2-4 months and that suggests the Dollar will be trading mostly sideways, or at least within a trading range that will not generate much catalytic action that would affect the market or the products. As such and for now, I will no longer be giving Dollar chart evaluations.
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Stock Analysis/Evaluation
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CHART Outlooks
The index market had a breakout this week that suggest that further upside is to be seen. As such, I have a couple of buy mentions this week. Nonetheless, the mentions this week are exclusively in the NASDAQ100, given that the buying is likely to be centered in that index. I have chosen 2 stocks that have prices that playable without too much portfolio money involved.
CPRT Friday Closing Price - 48.93
CPRT is a global provider of online vehicle auction and remarketing services to automotive resellers, such as insurance, rental car, fleet and finance companies in 11 countries; the U.S., Canada, the UK, Germany, Ireland, Brazil, Spain, UAE, Bahrain, Oman, and Finland.
CPRT has done nothing but move up in price over the past 14 months and this past week it made a new all-time high, after having traded sideways for the previous 6 months, suggesting the uptrend continues unabated.
CPRT reported earnings on Friday and they were better than expected and the stock made a new all-time daily and weekly closing high immediately thereafter. The stock broke above a double all-time daily closing high at 46.82/46.64, which will now be considered support from here on in. The stock gapped up between 47.32 and 47.66 and given that it came off of a fundamental change, the gap is unlikely to be closed. Nonetheless, even if it is closed, the daily close support at 46.82 is not likely to be broken, meaning that the bulls can buy with a clear risk support level below.
As far as the upside in CPRT is concerned, it is impossible to say given that it is trading on a new all-time high. Nonetheless, the previous time that the stock made a new all-time high was in April and using the weekly closing chart all-time high made thereafter, it would suggest that a $9 move above the 46.82 level will be seen over the next 14 weeks. Such a move would suggest that a rally up to around the 55.70 level is what will be seen.
As far as the stop loss is concerned, it will not be an intraweek stop loss but a daily closing stop loss. That does open the door for a bit more risk being at play. In addition, for the stop loss to be effective, 2 days would need to be used as confirmation of the failure to follow through signal would be needed. Having said that, the risk/reward ratio is still good enough to have confidence in doing the trade.
Purchases of CPRT below 48.00 and using a daily close stop loss at 46.54 and having a 55.70 objective will offer a 5-1 risk/reward ratio. My rating on the trade is a 3.75 (on a scale of 1-5 with 5 being the highest).
INTC Friday Closing Price - 38.86
INTC is a 100% tech company that will highly likely move up in conjunction with the NASDAQ. The stock made a new 16-month weekly closing high on Friday and the bulls now are committed to continuing higher until the rally ends (probably not for another 2+ months).
The upside objective of INTC is the 200-week MA, currently at 45.64. That level is a magnet now and the bulls are only facing 2 minor intraweek resistance levels on the way up (at 40.07 and at 40.73), which are not resistance levels that are likely to stop the rally if the NAZ continues higher.
As far as support is concerned, I will be using a minor intraweek support level close by below that was made this past week. It normally would not be a support level to have confidence in but then again, with the break of daily and weekly close resistance seen on Friday, that support is supposed to hold up, given that if it does not hold up, the breakout is not valid.
Purchases on INTC between Friday's close at 38.85 and down to 38.50 and using a stop loss at 37.65 and having an objective of 45.64, will offer a 5.6-1 risk/reward ratio. My rating on the trade is a 3 (on a scale of 1-5 with 5 being the highest).
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Updates
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Closed Trades, Open Positions and Stop Loss Changes |
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ENG continued to trade within the .25 to .30 level but did go below the previous week's low but stayed above the all-time low at .25 that was made 3 weeks ago. This means that if the earnings report that comes out Tuesday AM (supposedly but not actually scheduled for sure) is better than expected, the all-time low will have been tested successfully, giving the bulls a chance of making a recovery rally of note. Pivotal resistance is at .36 LXRX generated a key negative reversal week, having gone above the previous week's high but then making a new all-time intraweek and weekly closing low. This all happened after the company reported earnings and they were worse than expected. The chart action is strongly negative but the bulls were able to close above the $1 psychological support (closed at 1.01), giving a slight window for the bulls to negate the break. The stock did close on the high of the day on Friday, suggesting further upside above Friday's high at 1.03 will be seen on Monday. The all-time low daily close is at 1.03 and if the bulls are able to close above that level on Monday and confirm the failure signal on Tuesday with another close above 1.03, the bulls have a chance to negate this break. Evidently, the bears knew that a mountain of stop losses would be hit if they pushed the stock down after the earnings report, and it is possible that is why the new lows were made. As such, this week is highly important. The stock needs to close above 1.07 next Friday. MRNA generated an inside week but a red close, and near the lows of the week, suggesting further downside below last week's low at 67.85 will be seen this week. The stock made a new 38-month intraweek low the previous week and that low needs to be retested successfully before new buying interest is seen. Normally, having made a new 38-month weekly closing low would be a negative but the stock does show minor to decent weekly close support at 67.47 from October 2020 that did hold up. As such, this multi-week low weekly close is not as negative as it could be. If the intraweek low at 62.55 holds up (likely) and the stock does go below last week's low but then reverses to close green, it will give the bulls new ammunition for a rally up to the $95 level before the end of the year. NEM generated a new 53-month weekly closing low and a new 44-month intraweek low this past week. The stock closed near the low of the week and further downside below last week's low at 33.59 is expected to be seen. Nonetheless, the 44-month spike intraweek low at 33.00 was not broken and the stock did reach a 10-year channel uptrend line approximately at 34.00 that has been set with 8 different highs and lows over the past 10-years, that suggest that unless Gold breaks down totally (unlikely), that it will hold up this time as well. On the other side of the coin, this breakdown has been of note, meaning that for at least the rest of the year, the upside target (on a weekly closing basis) is not likely to be more than 40.72 and could be as little as 39.50. Evidently, if the stock gets below the 33.00 intraweek low from March 2020 (when the Pandemic started), the outlook will change. OXY generated a negative red week and closed in the lower half of the week's trading range, suggesting further downside below last week's low at 60.02 will be seen this week. Nonetheless, the stock did generate a positive reversal day on Friday and a close near the high of the day, suggesting that on Monday, the stock will go above Friday's high at 61.23. The 200-day MA is currently at 61.62 and that is likely where the stock will move up to. Nonetheless, the outlook for Oil is sideways to down and as such, it is unlikely the bulls will be able to do much with the stock as far as the upside it concerned. I am averaged long at 61.49 and as such, I will be looking to get out on Monday with a small gain or a small loss and leave the stock alone for now. If by any chance, the stock breaks above 62.27, I will reconsider that decision and if it gets above 63.76, I will keep the positions. I do not believe that will happen. PLNH generated a new 5-week high and did close on the high of the week, suggesting further upside above last week's high at .84 will be seen this week. The stock did generate a new buy signal, having closed on Friday above the 5-week weekly high close at .79. What makes this move even more indicative is the fact that the stock closed at .55 3 weeks ago and that has now become a successful retest of the all-time low at .48. This means that a bottom has been built and from which the bulls can buy with some confidence. Pivotal resistance is found at 1.00 and then again at 1.11. The former is established resistance as it has been the high weekly close on 2 occasions over the past 11 months. The latter is a previous low weekly close support, which when broken, caused the stock to fall to the .48 level. A close above that level will generate a failure signal of consequence against the bears and open the door for a rally to 1.50. It is important to note that over the past 49 weeks, the stock has now built a "rounded" bottom (strongest chart formation for support) and that suggests that the downtrend is totally over (especially when the 1.00 level gets broken). Such a bottom does open up the chart for a rally up to the 200-week MA (currently at 2.76) over the next 12 months (or less). The 200-day MA, currently at .71, is now daily close support. Two closes in a row below that level, would change the outlook mentioned above. VWDRY generated another buy signal, having closed above the high weekly close since the week of August 7th at 7.56 (closed at 7.61). The stock closed in the upper half of the week's trading range, suggesting further upside above last week's high at 8.25 will be seen this week. There is/was intraweek resistance of some consequence at 8.24, meaning that if the stock does go above last week's high, it will open the door for a rally up to the 200-week MA, currently at 9.71. Some intraweek support is now found at 7.40. The stock has moved straight up for the past 3 weeks and has moved up 28% over the past 6 weeks, meaning that the stock is now on a midterm uptrend. The 8.25 level is of importance this week but if broken, there is minor intraweek resistance at 8.76 and then nothing until minor to decent intraweek resistance at 9.31. The monthly chart suggests that the stock will close around the 8.65 level on November 30th. ZLAB reported earnings this past week (on Monday) and it was better than expected and the stock gapped up. The stock got up to the 200-day MA on Wednesday (currently at 30.51) with a high at 31.67 but the bulls were not able to break the line and the stock backed off to the gap line 27.50 with a low on Friday at 27.59. Nonetheless, the stock did close on the high of the day on Friday and the first course of action on Monday, is likely to be above Friday's high at 28.28. The stock did close in the lower half of the week's trading range, suggesting further downside below last week's low at 27.50 will be seen this week. By the same token, the reason for the gap is valid and the gap (down at 25.50) should not be closed. As such, it is possible that there will be no follow through to the downside this week and the stock will have an inside week and move back up to the MA line and perhaps generate another gap (runaway) the following week. There is intraweek resistance at 32.60 and then nothing until 37.92. This is a stock that is strongly underpriced based on its fundamentals but the Chinese stock market has kept the bears with ammunition. That chart seems to have a very pivotal week this week, meaning that keeping an eye on the Chinese market is important as the action in the stock could be determined by what that market does. The Chinese market closed on Friday at 17203 and there is pivotal support at 16879. If the Chinese market holds up, the stock could be on its way up to the $40 (or even the $50) level by the end of the year.
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1) ZLAB - Averaged long at 71.955 (6 mentions). No stop loss at present. Stock closed on Friday at 28.17. 2) ENG - Averaged long at 2.876 (6 mentions). No stop loss at present. Stock closed on Friday at .257. 3) VWDRY - Averaged long at 8.67 (23 mentions). Stop loss at 8.67. Stock closed on Friday at 8.01. 4) LXRX - Averaged long at 2.495 (2 mentions). No stop loss at present. Stock closed on Friday at 1.01. 5) OXY - Averaged long at 61.49 (2 mentions). Stop loss now at 59.65. Stock closed on Friday at 60.98. 6) MRNA - Purchased at 72.12. Averaged long at 70.63 (2 mentions). No stop loss at present. Stock closed on Friday at 70.05. 7) PLNH - Averaged long at 1.526 (3 mentions). No stop loss at present. Stock closed on Friday at .804. 8) SNDL - Averaged long at 9.05 (2 mentions). No stop loss at present. Stock closed at 1.43 on Friday. 9) NEM - Averaged long at 38.63 (2 mentions. No stop loss now. Stock closed on Friday at 34.20.
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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
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