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Issue #871 
July 28, 2024 , | Newsletter
The newsletter with chart analysis for stocks and stock indexes |
Stock Indexes Analysis/Evaluation
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| Major week ahead with economic and earnings reports that can be catalytical!
DOW Friday Closing Price - 40589 The index market last week was all over the place and in a disjointed way, given that the DOW generated a positive reversal week, having gone below the previous week's low and then closing green, on the high of the week and on a new all-time weekly closing high. On the other side of the coin, the SPX and the NASDAQ made a new 6 and 8 week lows, closed red, and in the lower half of the week's trading range. To all of this, the RUT continued to outperform all of the indexes, having made a new 32-month weekly closing high and moving up 3.6% vs the DOW at .8%. The disjointed action came off of a week where the only report that came out was GDP and it was higher than expected, which did support the rally in the DOW and RUT but was not shared by the SPX and the NAZ. This action brought more confusion than clarity to the market, given that the overall signals given where contrary to each other. Having said the above, this week should be the exact opposite, at least as far as the overall view/clarity of what to expect for the next few months. On Wednesday, the Fed will announce their rate decision for July. On Thursday morning the ISM Index report comes out in the morning and the earnings reports on AAPL and AMZN come out after the market close. On Friday morning, the JOBS report comes out. All of these reports are catalytical in nature and will paint a clear picture of what to expect for the next few months. Adding to all of this, there will also be more clarity on the possible election outcome in November as it seems now that both candidates are now clearly defined, and their platforms also clearly defined as well. The recent changes in the election scenario is one of the things that has made the market act crazily as of late. The chart scenario that I had expected to occur this past week did not get fulfilled and that does further confuse the chart picture, given that both support and resistance levels did not get better defined as I thought they would be. The new all-time high in the DOW and the new 32-month weekly closing high in the RUT means that there are no clear resistance levels close by above where automatic selling by computers and algorithms can be expected. In the case of the SPX and the NASDAQ the failure to get down to established support levels but nonetheless closing red and in the lower half of the week's trading ranges, also means that there are no levels close by of both resistance and support where automatic buying by computers and algorithms will buy automatically. This all means that this coming week it is not about charts but totally about the economic fundamental picture that the reports will show. Even then, the reports themselves are not likely to be so surprisingly off of expectations as to clearly define direction for the near future. The Fed is not expected to lower rates this week. The earnings reports on AAPL and AMZN are not expected to be all that surprising either (likely to come in a bit better than expected), and the same thing can be said about the ISM index and Jobs reports. The economy is doing a bit better than expected and inflation is continuing to slide slightly lower as time passes. Jobs are not going down in a big way and manufacturing has been moving up but slowly as of late. None of these reports are likely to change the picture all that much. As such and at the end of the week, it will likely get back to the charts and the picture is not clear there. Anyhow, there are a few things to watch for and that is what I will be doing here. The DOW is overbought and though it made a new all-time weekly closing high, the spike high rally seen the week before with an all-time intraweek high at 41376 (another 750 points above Friday's close) is not likely to get broken. This means that if the index does go above last week's high at 40752) but does not make a new all-time intraweek high, it could end up being the required and needed retest of that high, which in turn would likely generate a correction drop. The SPX closed in the lower half of the week's trading range and should see a lower low than last week's low at 5391. Nonetheless and on the daily closing chart, there is a breakaway/runaway gap formation with the runaway gap being at 5550 (91 points above Friday's close). In addition, there is established (but somewhat minor) intraweek resistance at 5505 and again at 5523, which one or both should be seen this week but the gap not closed, unless the economic reports are surprisingly good. The NASDAQ closed near the low of the week and further downside below last week's low at 18721 should be seen. The index also show a breakaway/runaway gap with the runaway gap being at 19736 (730 points higher than Friday's close). The index has daily close resistance at 19474 (on a daily closing basis) and that level should be seen (450 points higher than Friday's close) but not broken. The RUT should continue to outperform all the other indexes and on a daily closing basis, there is resistance starting at 2277 and going all the way up to 2352. On the weekly closing chart, the resistance is found between 2335 and 2352, which is likely to be seen but no more. What this all suggests is that some upward action will be seen this week but the chart levels are somewhat clearly defined and unless there are surprises in the reports this week (unlikely), the end result is likely to be some further downside to be seen over the next 2 months. Keep in mind that September is seasonally the worst month of the year and the charts do seem to suggest that will once again be the case this year. As such, expect some upside at the beginning of the week with those levels mentioned above tested and/or reached and then as the end of the week nears and the reports come out, expect downside to be seen. HSI generated another red week and closed on the low of the week, suggesting further downside below 16924 will be seen. The index has now dropped 9% over the past 2 weeks and 14% over the past 10 weeks. Nonetheless, the index now finds itself at a decent weekly close support level at 17047 (closed at 17021 on Friday) and at an even stronger support level on the daily closing chart, between 16991 ant 17082, which is a level that has one important previous low daily close at the former price and 3 previous high daily closes between 17047 and 17082, which were the 3 daily close resistance levels that when broken, ended the downtrend and generated a 2300 point rally. Simply stated, the downtrend was declared over in April and this is the expected/needed retest of that signal. On an intraweek basis, support is found at 16879, meaning another 45 points below last week's low. A drop down to that level is expected to be seen this week, followed by a rally up the rest of the week. Any daily close above 17635 will confirm all of this. Any daily close below 16991 would further weaken the chart.
GOLD(Aug 24 chart) experienced follow through to the downside after the previous week's negative reversal week. Gold closed red again and in the lower half of the week's trading range, suggesting further downside below last week's low at $2352 will be seen this week. Gold also generated a failure signal against the bulls and a new sell signal on the daily closing chart, having closed below the daily close breakout level at $2397 and below the most recent low daily close at $2394. Officially, the recent rally is over and Gold is trading sideways, awaiting new news. There are 3 daily close resistance levels above at $2385, at $2390 and pivotal at $2397. Gold closed at $2385 on Friday. To the downside, daily close support is now found at $2363 and at $2353, with the latter being pivotal, which if broken showing open air down to $2318. For the first 2 ½ days of the week, Gold is likely to trade between $2363 and $2397 and then when the reports from the week start coming out, some direction will be seen. Probabilities favor the bears. OIL gapped down on Monday and ended up the week, on the low of the week, suggesting further downside below last week's low at 76.03 will be seen this week. Oil finds itself at a short-term pivotal weekly close support area between 75.53 and 76.49 (closed on Friday at 76.44), which if broken would offer open air below to at least 73.81. It does need to be mentioned that as of Thursday, the chart becomes the September chart (not the August one) and in that chart, Oil closes at 77.19 and the support is at 76.47. On that September chart, any daily close above 78.28 would take away ammunition from the bears. The chart slightly favors the bulls (on a short-term basis) for a rally to close the gap at 79.17 (on the September chart). Nonetheless and on that same chart, a drop below last week's low at 76.04 would give a clear edge to the bears.
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Stock Analysis/Evaluation
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CHART Outlooks
I have no mentions (at this time) for this week as the market is strongly dependent on the news (not the chart) that comes out at the end of the week.
ds in 6 trading days, it does seem that a close around 73.95 will be seen then.
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Updates
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Closed Trades, Open Positions and Stop Loss Changes |
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AAPL generated follow through to the downside and closed red and near the low of the week, suggesting further downside below last week's low at 214.62 will be seen this week. Nonetheless, nothing else of consequence occurred this week and now it will be all about the earnings report on Thursday after the close, which is likely to decide what will happen from here on out. Having said that, the stock has now fallen 9.6% from the high and is now close to the first short-term pivotal daily close support at 216.67. That is the previous all-time high daily close after the stock broke out from the previous and more important all-time high daily closing high at 197.96. A daily close below 216.67 will generate a failure signal against the bulls and a close below 207.49 will open the door for a drop down to the $198 level. To the upside, daily close resistance is at 227.57. It is likely that for the first 4 days of the week, the stock will trade between 216.67 and 227.57. After the earnings report, any close above or below those 2 levels will be indicative. AXP generated a relatively uneventful inside week but then again, the stock did make a new all-time weekly closing high and closed near the high of the week, suggesting further upside above last week's high at 248.99 will be seen this week. Just like with the DOW, the stock does show a potential spike high top at 253.73 on the intraweek chart and if the stock does get above last week's high but does not make a new all-time intraweek high, it could become the required/needed retest of the all-time intraweek high that would become confirmation that the uptrend is over. In looking at the daily chart, intraweek resistance is found at 248.99, meaning that going above that level this week is not a big probability. If it does happen, then the all-time daily closing high at 249.96 will be the resistance that should not be broken, if and when a top has been found. To the downside, a daily close below 240.18 would now be a "bucket of ice cold water on the back of the bulls". Outlook for the week is not all that clear but this is a DOW stock so it is likely to move in tandem with the index. BABA generated a positive reversal week, having made a new 2-week low and then closing green and on the high of the week, suggesting further upside above last week's high at 77.19 will be seen this week. The stock did generate an indicative key reversal on the daily chart on Friday, having made a new 13-day low and then closing above Friday's high. What made it even more indicative is that the stock closed above the 200-day MA, currently at 76.27 (closed at 76.53). With the Chinese index closing at important and dependable support and likely to begin to move higher, the stock seems poised for some decent upward action. A daily close above 78.23 would break an indicative resistance level and give the bulls new ammunition. A daily close above 79.65 would suggest that the $88 level would then become the next target. Any daily close below 75.27 would negate this positive outlook. A monthly close (Wednesday) above 78.34 would be a breakout of note. DSGR continued higher with another green weekly close (3rd week in a row) and closed on the high of the week, suggesting further upside above last week's high at 34.54 will be seen this week. The stock generated a failure signal against the bears on the weekly closing chart, having closed above the low weekly close support at 32.90, which when broken caused the stock to fall down to 28.38. There is no resistance above until 35.61, which is a level likely to be seen this week. Further intraweek resistance is found at 36.61 and long term pivotal at 37.31. Daily close support is now found at 31.81, which if broken would negate this rally. The monthly close is on Wednesday and if the bulls are able to close the stock above 35.48 on that day, the uptrend that started in September 2022 will continue unabated. INTC followed through to the downside after the previous week's breakout and then negative reversal. The stock closed red and near the low of the week, suggesting further downside below last week's low at 30.95 will be seen this week. One additional negative is that a failure signal was given on the weekly closing chart, with the stock having closed on Friday below the previous weekly close resistance at 31.83 that caused the rally to 37.16 to occur when broken (closed on Friday at 31.35). On a potential positive note, the stock has built a support base over the past 3 months that is still in place (with daily closes at 29.85, at 30.03 and at 30.74) and in looking at the daily closing chart, the stock did generate a green close on Friday, making Thursday's close at 31.10 into the third successful retest of the 29.85 pivotal support level. Having said that, the bulls need to generate a close above the now daily close resistance at 31.73 in order to confirm the retest as being successful and negate the failure signal. Evidently, any daily close below 29.85 would be a strong chart negative. JD generated a positive reversal week, having made a new 3-week low and then closing green and in the upper half of the week's trading range, suggesting further upside above last week's high at 27.39 will be seen this week. If the stock goes above Friday's high at 26.67, a double low on the intraweek daily chart at 25.57/25.63 will be built and if the stock then goes above the 27.39 level, a buy signal of some short-term consequence will have been given. If all of that happens, it will also mean that the stock has confirmed a break above the 200-day MA, currently at 26.93, which in turn will bring in some strong computer/algorithm buying with an immediate upside of 28.63. The big pivotal intraweek resistance is found at 29.07/29.27. A break of that resistance will open the door wide for a run to $35. Pivotal intraweek support is at 24.66 but now, if the support at 25.57 breaks, the odds of a break of the lower support would increase strongly. One thing to watch for on Wednesday (monthly close). The stock is having a positive reversal month and a close above 27.23 would mean a close in the upper half of the month's trading range and that would also suggest that a rally up to at least $35 would be seen in August. LXRX generated a positive reversal week, having gone below the previous week's low and then closing above the previous week's high. The stock closed on the high of the week, suggesting further upside above last week's high at 2.45 will be seen this week. The stock has now rallied 36% over the past 3 weeks and does show open air above to 2.83. A close on Wednesday (monthly close) above 2.49 would generate a break of pivotal resistance that would offer a 3.29-3.48 objective for August. Intraweek support is now found at 2.09 and pivotal at 1.94. With the small cap index rallying and the stock doing the same, the momentum is on the side of the bulls and should continue. PYPL made a new 5-month intraweek low and closed in the lower half of the week's trading range, suggesting further downside below last week's low at 56.97 will be seen this week. Nonetheless, follow through to the downside may not occur, given that the bulls were able to still close above the most recent low weekly close at 58.03 (made 6 weeks ago) and on the daily chart, the stock generated a positive reversal day on Friday, having made the week's low on that day but then closing green and on the high of the week, suggesting the first course of business on Monday will be to the upside and above Friday's high at 58.31. There is minor intraweek resistance at 58.76 and then a bit stronger (but still minor) at 60.16. Pivotal intraweek resistance is found at 62.02 but if the bulls are able to rally enough and close above the 200-day MA, currently at 60.71, the odds of a break of resistance will increase. Evidently and if the stock is able to get above Friday's high at 58.31, the 56.97 low will become short-term pivotal support. Nonetheless, intraweek support is still found at 56.47 and at 55.77 that will continue to give support to the stock if that low is broken. On the other side of the coin and with this coming week being pivotal for the overall market, the bulls need to take advantage of this new support and rally the stock immediately. A close on Wednesday (monthly close) above 59.57 would be a decent positive. SNDL made a new 11-week high and closed near the high of the week, suggesting further upside above last week's high at 2.37 will be seen this week. More importantly, the stock closed above an established weekly close resistance at 2.20 that suggests the bulls are back in control. There is now open air up to the 2.67 level, which should be seen either this week or next. A close on Wednesday (monthly close) above 2.47 would be a bull statement of note. Daily close support is now found at 2.13. A close below that level would take away ammunition from the bulls. SNOW made a new 4-week low and closed 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 125.50 than above last week's high at 134.17. Having said that though, the bulls were able to stay above a short-term pivotal support level at 127.17 (closed at 129.00), meaning that the weakness seen has not changed the outlook for higher prices. On a monthly closing basis (Wednesday), the 127.65 level is pivotal. That has been the all-time low monthly close and a close below that level would be a big negative. A monthly close above 135.71 would be a positive. In looking at the daily chart, a rally above 132.99 would be a small positive and a rally above 134.17 would break short-term resistance. VWDRY went above last week's high and closed on the high of the week, suggesting further upside above last week's high at 7.84 will be seen this week. The green weekly close negated the previous week's break of support but the bulls were unable to do more than that. Daily close resistance is found at 8.12 and at 8.29, with the latter (if broken) giving a failure signal against the bears. Indicative-of-short-term-trend daily close support is now found at 7.50. The 7.67 level is important for Wednesday's monthly close. A close above that level would be a green close and would mean that the lower part of monthly up channel line has held up, which in turn would suggest the stock is on a rally back up to the top of the channel line, which would be at $12 in a few months. With small cap stocks rallying and the channel line likely to hold up, the bulls likely have the edge. ZLAB generated an uneventful green week but did close on the low of the week, suggesting further downside below last week's low at 18.60 will be seen this week. In looking at the monthly chart, the stock is having a positive reversal month, having made a new 3-month low in July and now trading green and near the high of the month, suggesting that if it closes on Wednesday above 18.18, further upside above July's high at 20.15 will be seen in August. Short-term pivotal intraweek support is now found at 18.09 and a bit stronger at 17.68. With the Chinese index likely to see a recovery rally beginning this week, the probabilities favor the bulls. The 200-day MA is currently at 21.29 and that is a possible upside objective for this week (or next). A weekly close next Friday above 20.08 would confirm that a bottom has been built and that a mid-term uptrend has likely begun.
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1) ZLAB - Averaged long at 65.50 (7 mentions). No stop loss at present. Stock closed on Friday at 18.86. 2) ENG - Averaged long at 18.30. No stop loss at present. Stock closed on Friday at 1.93. 3) VWDRY - Averaged long at 8.68 (4 mentions). No stop loss at present. Stock closed on Friday at 7.81. 4) LXRX - Averaged long at 1.553 (3 mentions). No stop loss at present. Stock closed on Friday at 2.39. 5) BABA - Averaged long at 75.37 (2 mentions). Stop loss at 72.62. Stock closed on Friday at 76.53. 6) SNDL - Averaged long at 9.05 (2 mentions). No stop loss at present. Stock closed on Friday at 2.24. 7) JD - Purchased at 21.33. Stop loss is at 23.55. Stock closed on Friday at 26.56. 8) PYPL - Averaged long at 49.465 (2 mentions). Stop loss is at 56.65. Stock closed on Friday at 58.29. 9) INTC - Purchased at 30.34. Stock closed on Friday at 31.35. 10) SNOW - Averaged long at 137.343 (3 mentions). No stop loss at present. Stock closed on Friday at 129.00. 11) DSGR - Purchased at 28.83. Stop loss is at 27.91. Stock closed on Friday at 34.45. 12) AAPL - Shorted at 232.35. No stop loss at present. Stock closed on Friday at 217.96. 13) AXP - Shorted at 245.42 and at 248.37. Averaged short at 246.895 (2 mentions. No stop loss at present. Stock closed on Friday at 245.89.
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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.
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information enclosed above, regarding his background, length of trading, and experience, is correct
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