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Issue #885 
November 3, 2024 , | Newsletter
The newsletter with chart analysis for stocks and stock indexes |
Stock Indexes Analysis/Evaluation
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| Tangible Signs of a Top having been found. Indexes drop in spite of positive earnings and economic reports.
DOW Friday Closing Price - 42053 October ended up being a negative reversal month with the DOW and the SPX making new all-time intramonth highs and then closing red. The NASDAQ generated a negative reversal month but the bulls failed to make a new all-time intramonth high, having gotten within 90 points of the all-time intramonth high at 20690 (20600 was the high) and then closing red as well. The RUT failed to make a new 36-month intramonth high, having gotten within 11 points (2289 vs 2300) of the 32-month high made 4 months ago. All indexes closed on or near the low of the month, suggesting further downside below last month's lows (DOW at 41704, SPX at 5674, NAZ at 19622 and RUT at 2170) will be seen this month. The week was full of important fundamental information as the Jobs, ISM Index and PCE inflation reports came out, as well as earnings reports on 5 big stocks (GOOGL, AAPL, AMZN, META, and INTC). The reports were either as expected, slightly worse than expected or in the case of GOOGL and AMZN, much better than expected. As such, the negative reversal action in the index market was a bit unexpected (not as the bulls would have liked it to be). This does suggest that the probabilities of the market heading lower from here on in, is high. In looking at the monthly charts, there is a lot of room to the downside before support is reached. In the DOW, there is no support found until 38499 is reached (3953 points lower), in the SPX the support is at 5119 (609 points lower), in the NASDAQ it is at 17435 (2568 points lower) and in the RUT it is at 1993 (217 points lower). These, of course, are the monthly charts which are not meaningful on a short-term basis (meaning it could take months to get down to test those levels). Nonetheless, it is important to note that even such a move down would still be within the context of a potentially-continuing bull market, meaning that such drops would not suggest that a downtrend has started. On a shorter term basis, the indexes did close in the lower half of the week's trading range (DOW) or near the low of the week (rest of the indexes), meaning that further downside below last week's lows (DOW at 41704. SPX at 5702, NAZ at 19880 and RUT at 2196) are expected to be seen this week. This means the with the exception of the DOW, the rest of the indexes still have a bit more to go before going below last month's low. This does make the DOW the indicative index for the week. There are no possibly catalytic reports scheduled for this week but the Fed rate decision is scheduled to come out on Thursday and that could be catalytical. Expectations are for a 25 point rate cut. Probabilities strongly favor no surprises, meaning that kind of cut is already factored into the market and is not likely to be catalytical. A bigger cut or no cut at all, would be catalytical but not likely to happen. As such, charts will likely be the deciding factor for the week. then again, the charts are presently leaning to the downside and that suggests selling pressure will be the norm. To the upside and looking at potential pivot points that would help the bulls negate this scenario, if the DOW gets above 42628, the SPX above 5817, the NASDAQ above 20600, and the RUT above 2259, the scenario will change. There is one other thing to watch this week that does have potential for being strongly negative. The SPX and the NASDAQ both gapped down on Thursday from 5811 and from 20378. If there is another gap generated this week, a breakaway/runaway gap formation will be formed that will give the bears new and strong ammunition. On the other side of the coin, the gaps are magnets at this time and likely to be closed. That could mean that at the beginning of the week, some strength will be seen and then after the Fed Rate decision on Thursday, the selling come back. As such, it is difficult to fine tune what the indexes will do at the beginning of the week. HSI index generated a 4th red close week in a row but this time the index did go below the previous week's low and then rallied enough to 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 20701 than below last week's low at 20317. If that does occur, last week's low will become the required/necessary retest of the correction low at 19977 and it will bring back buying interest. If then the index gets above 20952, the retest of the low will be confirmed and a resumption of the uptrend, or a retest of the recent high at 23241 will likely be seen. It does need to be mentioned that a retest of the 20,000 level was expected and that now is likely to have been accomplished, meaning that the index "is" likely to head higher. A break below 19977 would now be seen as a new chart negative.
GOLD(Dec 24 chart) continued the uptrend, having made another new all-time intraweek and weekly closing high. Nonetheless, on this occasion Gold closed near the low of the week, suggesting further downside below last week's low at $2725 will be seen this week. On a daily closing basis, there is resistance at $2759 and at the all-time high daily close at $2800 (closed on Friday at $2749). To the downside, there is short term support at $2729, uptrend support at $2690 and trend changing support at $2626. At this time, the probabilities seem to suggest that Gold will get into a consolidating phase where sideways trading between $2759 and $2690 (on a daily closing basis) will occur over the next few weeks (barring a Fed rate cut stop). OIL generated a positive reversal week, having made a new 4-week low and then closing green and slightly in the upper half of the week's trading range, suggesting a slightly higher probability of going above last week's high at 71.45 than below last week's low at 66.72. If that occurs, Oil will be showing a 2nd successful retest of the 16-month low at 65.27 seen in September. If that scenario does happpen, a minimum rally to 72.49 (on a daily closing basis) will be seen and if that level gets broken, there is open air up to 78.46. The bears though, remain with control that will not change unless 78.46 is broken. At this time, Oil continue to show a higher probability of heading down to the $42 level (over the next 6-12 months) than breaking the downtrend. For this week though, the charts suggest that Oil will trade between 68.17 and 72.49.
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Stock Analysis/Evaluation
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CHART Outlooks
It was frustrating this past week to have missed purchasing the buy mention (RBLX) that I gave last week. The stock did not get down to the desired entry point (got down to within $.30) and then exploded to the upside on a good piece of news that came out, and reached the objective of the trade, all within the week. Sigh.
Anyhow, I have another mention this week but the probabilities of the stock reaching the desired entry point are 50-50 at best. Nonetheless, the only way that this buy mention should be instituted is if it reaches the desired entry point as the probability rating is not high and therefore the risk/reward ratio needs to be good, in order to do the purchase.
FSLR Friday Closing Price - 204.94
FSLR reported earnings 5 weeks ago and they were worse than expected and that caused the stock to negate the breakout seen 2 weeks prior to that. In the ensuing 2 weeks after the earnings reports came out, several companies downgraded their ratings on the price objective and that caused additional selling to occur and the stock to drop 21% in price. Having said all of that, most rating companies retained a high price objectives (even after the downgrades) of at least $250 and some as high as $320.
FSLR generated a positive key reversal this past week, having made a new 24-week low (at 183.68) and then turning around to go above the previous week's high at 204.61 and close near the high of the week (closed at 204.94), suggesting further upside above last week's high at 206.80 will be seen this week. This does suggest that the correction is over and that a recovery rally is to be seen.
On a potentially short-term negative note, FSLR barely closed above the 200-day MA (currently at 203.18) and the week's low at 183.68 has not yet seen a retest of it (which is needed/required as no new news has come out). As such, there is a good possibility that before the stock goes above last week's high that a drop down the a previously established intraweek support at 190.81 will be seen. A drop down near that level will be the desired entry point into the trade.
To the upside, FSLR shows intraweek resistance at the high of the week at 206.80 and then open air until very minor intraweek resistance at 219.67 is reached. Above that level, the next resistance is at 232.87. The high seen prior to the earnings report was at 262.72 and just last week, Goldman Sachs offered a $279 price target. The chart suggest that the $244-$251 level is a valid objective.
Purchases of FSLR around the $191 level, using a stop loss at 183.58 and having a 244.21 objective, offers a 7-1 risk/reward ratio. My rating on the trade is a 3 (on a scale of 1-5 with 5 being the highest). I do want to mention that the desired entry point can easily change (to a higher entry point) if a retest of the low occurs but the stock does not get down to the $191 level. Such a change will be mentioned at the Reddit message board.
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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 11/1 Profit of $8,652 using 100 shares per mention Closed out profitable trades for October per 100 shares per mention
NONE
Closed positions with increase in equity above last months close. NONE Total Profit for October, per 100 shares. $0/font> Closed out losing trades for September per 100 shares of each mention.
NONE
Open positions in profit per 100 shares per mention as of 11/1 Closed positions with decrease in equity below last months close. NONE Total Loss for October, per 100 shares $0
BCTX (long) $4
Open positions with increase in equity above last months close.
AAPL (short) $709
AXP (short) $224 Total $7,396 Open positions in loss per 100 shares per mention as of 10/1
LXRX (long) $1
Open positions with decrease in equity below last months close.
SNDL (long) $4 Total $554 Status of trades for month of October per 100 shares on each mention after losses subtracted.
Profit of $6,842
Status of account/portfolio for 2024, as of 10/31Profit of $15,594 per 100 shares.
AAPL reported earnings and they were very slightly better than expected but it was also announced that Warren Buffett sold 25% of it shares and the stock ended up dropping 3% from its previous day's close. The stock closed red and near the low of the week, suggesting further downside below last week's low at 220.27 will be seen this week. On the daily closing chart, the stock generated a sell signal and a small failure signal, having closed below 230.76, as well as below a previous short-term pivotal high daily close at 228.88 (closed on Friday at 222.91). There is a previous low daily close at 221.69, which if broken would break a 3-point up trendline, which would suggest that at least a sideways to short-term downtrend has begun. Minimum downside target of such a break would be the $210 level. There is longer term daily close support at 207.23, that is broken would suggest the 200-day MA, currently at 202.15 would be seen. In looking at the weekly closing chart, a weekly close below 220.82 would break the uptrend and a close below 216.24 would suggest the previous all-time weekly closing high at 197.57 would be targeted. To the upside, a daily close above 230.76 is needed for the bulls to negate the short-term negative outlook. AXP generated an uneventful inside week but did close green and in the upper half of the week's trading range, suggesting further upside above last week's high at 275.07 will be seen this week. The stock made an all-time intraweek and weekly closing high 3 weeks ago at 286.36 and 279.79 (respectively) and with no new negative news, those two highs require/need a successful retest of them before the bears climb aboard. On a daily closing basis, there is resistance at 275.79 and then at the all-time high daily close at 285.78. There is an open gap between 279.20 and 282.48 that should not be closed as it was supported by the negative earnings report that came out 2 weeks ago. This does suggest that if the bulls fail to negate all of the above, that a second gap will be seen at some point. As such, the 275.79 on a daily closing basis is key to the short/immediate term outlook. If the bulls fail to close above that level any day this week, selling will appear and another gap will likely occur. If the bulls close above 275.79, then the gap up at 279.79 will likely be seen. To the downside, pivotal intraweek support is found at 266.35. A break below that level would offer at least a drop down to $260. Nonetheless, if a breakaway/runaway gap occurs, a drop down to the 200-day MA, currently at 237.54 would likely occur. Keep in mind that after the earning reports, rating companies are mixed with Goldman Sachs keeping a buy rating with a $300 target but Morgan Stanley lowering its rating and giving a down side target of $248. Other rating companies offer objectives of $276 all the way down to $215. BCTX did generate a bit of a breakdown this week, having made a new 24-trading day low and closing convincingly below the daily and weekly breakout closing high support at .864 (stock closed on Friday at .795). There was no news to support the mini breakdown but the stock is now in a position to test an important intraweek low at .66, which was the low made after all the positive news on the company came out. The next daily close support is found at .69. To the upside, the .864 level is now resistance and if broken and then a close above .92 occurs, the bulls will get new chart ammunition. At this time though, it does not seem like the stock is ready to do much of anything and is likely to trade sideways for a couple of weeks, between .70 and .90. DD generated a failure signal this week on both the daily and weekly closing chart, having closed on Friday at 82.50 (below the previous high daily and weekly close at 84.25. The stock, closed on the low of the week and further downside below last week's low at 82.38 will be seen this week. There is some minor intraweek support at 81.75 and then open air to 78.95. Nonetheless, the 200-day MA, currently at 77.83 does seem to be a magnet at this time. To the upside, there is some minor intraweek resistance at 84.37 and strong and more short-term pivotal at 85.12. On a cautionary note, the stock now shows 5 red weekly closes in a row and there is some daily close support at 82.16, which also coincides with the 100-day MA. In addition, the stock reports earnings on Tuesday morning. If by any chance the stock gets anywhere near the $78 level on Monday, consideration to taking the small profits should be taken. IBM generated another red weekly close and closed in the lower half of the week's trading range, suggesting further downside below last week's low at 203.51 will be seen this week. The stock has now fallen over 10% in value since the earnings report came out. The stock did generate a bit of a bounce (from 203.51 to 209.54 on Thursday's announcement that the Board of Directors had approved giving quarterly cash dividends. Having said that, what the chart suggests will happen is that a drop down to the previous all-time high weekly close at 195.95 (197.77 on a daily closing basis) is likely to occur. To the upside, the 224.00 area is now likely to be indicative resistance. LXRX reported on Friday that the FDA opposes its drug called Zynquista (for type 1 Diabetes and Kidney failure) being approved and the stock dropped 40% in value. The FDA opposition to the drug is not yet official as it will be reevaluated in December but for the meantime, most of the support levels built over the past 10 months got broken, and now the bulls are totally in a defensive posture. On a fundamental basis, the company remains a buy recommendation as it has other drugs that are already approved or are being worked on (Zynquista is just one of many) and has an innovative approach to new drugs to help sick people. The stock did close on the low of the week and further downside below last week's low at 1.16 is expected to be seen this week. The daily and weekly closes on Friday were still above the long-term pivotal support at 1.01 so it cannot be said that this announcement is a game changer other than for the short-term. It is evident that when the FDA meets again on this drug on December 20th and gives an official Yay or Nay on the drug, that the stock is likely to trade within the 1.00 and 1.60 level where daily and weekly close support and resistance is now found. Having said that, the stock at these levels is an attractive opportunity for purchase or adding positions. The presently held positions should continue to be held unless the $1 gets broken. SNDL generated a negative reversal week, having made a new 13-week intraweek high and then closing red and on the low of the week, suggesting further downside below last week's low at 2.08 will be seen this week. On a weekly closing basis, the stock remains in a sideways trading range. The company reports earnings on Tuesday before the open. On a daily closing basis, the levels to watch is 2.29 and 1.92. A break above the former or below the latter will determine the new trend. It is highly likely that this report will generate enough movement to break the sideways trend, one way or the other. VWDRY generated a green week and did close in the upper half of the week's trading range, suggesting further upside above last week's high at 6.47 will be seen this week. Nonetheless, the bulls have accomplished nothing yet as a weekly close above 6.51 is required for any new buying interest to be seen. The probabilities favor the stock closing at 6.51 on Friday, given that the company reports earning on November 13th AM, and based on the earnings, the stock will resume the downtrend or begin to reverse it. ZLAB generated an uneventful inside week but did close red and on the low of the week. suggesting further downside below last week's low at 30.01 wll be seen this week. Having said that, the stock still closed above the 29.99 weekly close resistance level for the 2nd time in a row (closed at 30.46), meaning that the breakout (after the previous week's positive news) was confirmed. As such, the probabilities favor that this red close will turn out to be the required/needed retest of the breakout level. With the Chinese index likely to start moving up, it is probable that a green close will occur on Friday and further upside be seen. On a daily closing basis, a close below 26.25 would be a negative sign, while a close above 33.18 a sign that further upside is to be seen.
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1) ZLAB - Averaged long at 65.50 (7 mentions). No stop loss at present. Stock closed on Friday at 30.46. 2) ENG - Averaged long at 18.30. No stop loss at present. Stock closed on Friday at 1.35. 3) VWDRY - Averaged long at 8.68 (4 mentions). No stop loss at present. Stock closed on Friday at 6.34. 4) LXRX - Averaged long at 1.63 (5 mentions). No stop loss at present. Stock closed on Friday at 1.20. 5) BCTX - Purchased at .775. No stop loss at present. Stock closed on Friday at .795 6) SNDL - Averaged long at 9.05 (2 mentions). No stop loss at present. Stock closed on Friday at 2.11. 7) IBM - Shorted at 218.74. No stop loss at present. Stock closed on Friday at 208.25. 8) AXP - Averaged short at 252.16 (3 mentions). Stock closed on Friday at 272.69. 9) AAPL - Shorted at 227.57. No stop loss at present. Stock closed on Friday at 222.91. 10) DD - Shorted at 82.07. No stop loss at present. Stock closed on Friday at 82.50.
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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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