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Issue #832 
October 15, 2023 , | Newsletter
The newsletter with chart analysis for stocks and stock indexes |
Stock Indexes Analysis/Evaluation
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| Recovery rally falls short of expectations. Market now dependent on earnings report.
DOW Friday closing price - 33757
The index market generated a mixed week with the DOW, the SPX and the NASDAQ all closing green but the RUT closing red. In addition, the SPX and the NASDAQ closed in the lower half of the week's trading range and the RUT closing on the low of the week, suggesting further downside below last week's lows will be seen this week. The bounce up was expected as all indexes had reached established support levels the previous week. Nonetheless and in the end, the bounce up was minimal in nature as the bulls were only able to accomplish less than a 1% gain.
The NASDAQ has been the key index when the market is heading higher as it has consistently outperformed the other indexes when a rally is occurring. This week and in spite of the green weekly close, the index closed only .7% higher, while the DOW closed .8% higher. One additional factor that should be mentioned is that the NASDAQ reached a 2 point downtrend line that is presently at 15313 with a high last week at 15333. If the index goes below last week's low at 14816, the line will become a 3-point line, which makes it a valid and strong resistance that would require positive fundamental news to break. If the recent low at 14433 would then be broken, the downside target would become 13533, which is where the 100-week MA is currently at. That line has been viable support 6 times over the past 10 years and viable resistance once during that same period of time. What this actually means is that it is a "viable chart downside target.
As far as news is concerned, the inflation numbers that came out were higher than expected but the earnings reports (which started coming out on Friday) were better than expected, meaning they sort of washed themselves out. This week, the earnings reports continue but they are split between all 3 indexes (last week they were all in the SPX index area). NFLX is probably the most important and it is due out Wednesday afternoon. As far as economic reports, there are 2 that have some importance. On Tuesday morning, Retails Sales comes out and on Wednesday morning, Housing Starts comes out. Neither of these reports are likely to be catalytic.
Based on what is due out this week, it is unlikely that anything of great consequence will occur. Nonetheless, the bears have the edge at this time and that is likely to continue this week.
The DOW is not likely to go above last week's high in spite of closing in the upper half of the week's trading range but it is likely to once again test the 200-day MA, which is currently at 34888. The index has been up to and slightly above that line the past 4 days without the bulls being able to close above it. The index made a new 13-day intraweek high on Friday and that high (at 33957) is likely to be tested before any selling comes in. It is possible that high could be broken but then the 34000 demilitarized zone (33970-34030) would likely stop any rally. The bears have held that MA line on a daily closing basis and there is no reason to believe that line could be broken, or at least confirmed broken (2 closes in a row above the line). The SPX has a minimum downside objective of 4263, which could be seen this week or at most the week after. The NASDAQ has a downside objective of 14715, which should be seen this week.
As stated above, this week is not likely to have any movement of great consequence but for your information, here are the levels of resistance (which if broken) would generate a lot of new selling interest. In the DOW at 34082, in the SPX at 4448. Nonetheless and with the bulls failing to close the gap at 4401 after 4 attempts, that "runaway" gap is now likely to be short-term pivotal if closed. In the NASDAQ at 15512.
The RUT has continued to show weakness and there are 2 levels of intraweek support at 1695 and at 1682. A break of the former would bring in short-term weakness and a break of the latter would bring in a lot of new selling interest. On the other side of the coin, a break above 1812 would likely bring in some short-term buying interest. This index is quite important for the longer-term outlook for the market. This index usually rallies before a definite trend change occurs. If it breaks support, it means things overall are negative now.
Anyhow, no indicative changes should occur this week, either for the bulls or for the bears.
OIL did not follow through to the downside in spite of having closed near the low of the previous week. An inside week occurred as well as a close on the high of the week, suggesting further upside above last week's high at 87.83 will be seen this week. This rally was supported fundamentally by the war that began in Israel this past week. How much more the war will cause Oil to go up is not something clear at this time. Nonetheless and looking at the chart, the green weekly close means that the breakout area at 83.13 has now been tested successfully with the previous week's close at 82.79, followed by the green weekly close on Friday. This does suggest that the uptrend in place is continuing and that the probabilities of breaking the recent weekly closing high at 90.79 are high. Further and more important weekly closing resistance is found at 92.61, which if broken would suggest the 98.26 would be seen. On a daily closing basis, resistance is found at 93.68. A confirmed close above that level would suggest the same. Pivotal daily close support is now found at 83.47. The chart suggests that this week, Oil will see a rally up to at least 89.38. Like with the index market, it is unlikely that any statement of consequence will occur this week.
DOLLAR generated a positive reversal week, having gone below the previous week's low and the closing green and on the high of the week, suggesting further upside above last week's high at 106.69 will be seen this week. The Dollar continues on an uptrend with an upside objective of 107.99. The chart was in need of building some support below and that has now been done (at least on the daily closing chart). On a daily closing basis, short-term pivotal support is now found at 105.82. As such, it can be said that the downside objective at 105.21 (on a daily closing basis) has been fulfilled. The fact that it was not reached, gives the bulls a bit more strength. Nonetheless, the $105-$108 trading range for October, remains viable.
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Stock Analysis/Evaluation
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CHART Outlooks
The market direction for the short or long term continues to be unresolved and unclear. In addition, very little has occurred that gives any indication of what is to happen "this weeek". There are a few indications that give the bulls a slight edge as far as some of the held stock are concerned but it has been difficult to find any stocks that offer good risk/reward ratios as well as decent probability ratings. As such and once again, I have no mentions this week, or at least for the newsletter. I do have some stocks under consideratio for trading but more chart action is needed before I jump in. It could happen during the week and if it does, I will let you know on the message board.
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Updates
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Closed Trades, Open Positions and Stop Loss Changes |
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ENG once again got down close to the .30 cent support level with a low this past week at .30. Nonetheless, it was expected by the action the previous week that the low would be broken. Nonetheless, that did not happen and that means the stock remains in the same place it has been for the past 8 weeks. There has been no new news (good or bad) on the company for over 2 months. As stated last week, any break above .36 or below .30 would be indicative. LXRX received news a couple of weeks ago that one of their drugs has received "preferred formulary status". This past week, it was stated that the stock was receiving "insider trader buying" and as such and on the charts, a new (second) buy signal was given when the stock closed above 1.12 on Friday. Nonetheless and on the same daily chart, the bulls have one more daily close resistance obstacle to break before it can be said that the downside is over. A daily close above 1.21 is what is needed to generate conviction that the downside is over. The stock did close on the high of the week and further upside above last week's high at 1.22 is expected to be seen this week. On the intraweek chart, there is resistance at 1.26, which if broken would offer a minimum upside to 1.31. A confirmed close above 1.31 would generate a failure signal against the bears. If that is confirmed with a close above 1.46 on the weekly chart, it would open the door wide for a rally up to the 1.82-1.90 area. The stock now shows a successful retest of the 1.00 low on both the daily and weekly charts, meaning that a rally can now occur without any magnets below. A daily close below 1.04 would negative the picture given above. PLNH made a new 6-week intraweek low but then turned around to close slightly in the upper half of the week's trading range, suggesting a slightly higher probability of going above last week's high at .83 than going below last week's low at .70. In looking at the daily chart, the 200-day MA, currently at .734, has continued to hold up, suggesting that unless some negative news comes out, the bulls still have the edge. The new 6-week low needs to be retested this week and with the stock closing on the low of the day on Friday, such a retest is likely to occur on Monday. After the retest occurs, any daily close above .83 would generate a new buy signal that would likely renew the uptrend and give a minimum objective of 1.00. A weekly close above 1.00 would offer a 1.12-1.20 objective. Any confirmed daily close below the MA line, would be a negative to the stock. SNDL broke the weekly close support at 1.58 with a close on Friday at 1.55. As such, the bulls need to negate the break this week or face the beginning of a short-term downtrend. The stock did close near the low of the week and further downside below last week's low at 1.52 is expected to be seen this week. There is short-term pivotal intraweek support at 1.48, which if broken would erase all the gains and advances seen since August. To the upside, pivotal resistance is found at 1.84, which is further strengthened by the 200-day MA, currently at 1.72. The bulls now need to generate a break above 1.84 and a confirmed close above the MA line to recover the impetus of the uptrend. TCEHY generated a negative reversal week, having made a new 3-week high but then closing red and near the low of the week, suggesting further downside below last week's low at 38.69 will be seen this week. Nonetheless, the action is not yet considered a negative given that the previous week the stock made a new 10-month intraweek low and as such, that low needs to be retested successfully before the bulls step in with more confidence in buying. Potential downside target for this week is 38.21, followed by a recovery thereafter. Any break below 37.69 would now be considered a strong negative. Pivotal resistance is at 42.84. TNC generated a negative reversal week, having made a new 4-week high and then closing red and near the low of the week, suggesting further downside below last week's low at 74.17 will be seen this week. One additional negative is that the stock had generated a failure signal against the bears the previous week but that signal was negated this week when the stock closed below 75.25 (closed at 75.00). As such, the bears are with the edge again. Nonetheless, the bears still need to do more to convince traders that this stock is heading lower. The stock still held above the 200-day MA, currently at 74.15, and up to now over the past 15 trading days, that line has not been broken, even on an intraday basis. As such, the bears need to break the line to get more selling interest and break below the recent low at 73.57 to confirm further downside. If that occurs, the target would be at least 72.60 but more likely a drop down to the 200-week MA, currently at 71.33. To the upside, resistance is now found at 76.11, which if broken, would take the edge away from the bears. VWDRY generated a green week and a close in the upper half of the week's trading range, suggesting further upside above last week's high at 7.08 will be seen. Nonetheless, the bulls did not accomplish anything of consequence. If the stock gets above 7.19 this week, it will generate a small buy signal that would suggest that a bottom has been made at 6.23. A rally above 7.60 would confirm such a bottom is in place. To the downside and for this week, the 6.73 level is going to be a support area that should not be broken. ZLAB generated a green week (the first in the past 5 weeks) and did generate a buy signal on the daily closing chart, having closed above the most recent high daily close at 24.98 (closed at 25.22). Nonetheless, the bulls fell short of accomplishing a failure signal against the bulls when they were not able to close above a previous low weekly close of some indicative power at 25.30. By the same token, they did close near the high of the week and further upside above last week's high at 25.83 is expected to be seen. If that does occur, a minimum rally up to the 100-day MA, currently at 27.11 is likely to be seen. Any weekly close above 26.40 would confirm that the worst of the downtrend is over and would open up the chart for a rally to 30.70. Any weekly close below 23.85 would give control back to the bears. On a daily closing basis, any daily close below 23.58 would do the same.
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1) ZLAB - Averaged long at 71.955 (6 mentions). No stop loss at present. Stock closed on Friday at 25.22. 2) ENG - Averaged long at 2.876 (6 mentions). No stop loss at present. Stock closed on Friday at .324. 3) VWDRY - Averaged long at 8.67 (23 mentions). Stop loss at 8.67. Stock closed on Friday at 6.88. 4) LXRX - Averaged long at 2.495 (2 mentions). No stop loss at present. Stock closed on Friday at 1.19. 5) TCEHY - Purchased at 43.23. No stop loss at present. Stock closed on Friday at 39.00. 6) TNC - Shorted at 77.72. Averaged short at 80.485 (2 mentions). Stop loss now at 76.31. Stock closed on Friday at 75.00. 7) TOL - Covered shorts at 70.34. Shorted at 80.62. Profit on the trade of $1028 per 100 shares. 8) PLNH - Averaged long at 1.526 (3 mentions). Stop loss at .66. Stock closed on Friday at .778. 9) SNDL - Averaged long at 9.05 (2 mentions). No stop loss at present. Stock closed at 1.55 on Friday.
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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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