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Issue #886 
November 10, 2024 , | Newsletter
The newsletter with chart analysis for stocks and stock indexes |
Stock Indexes Analysis/Evaluation
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| Trump win changes market in a strong way!
DOW Friday Closing Price - 43988 The indexes had a major week up with the DOW increasing 3.6% in value, the SPX increasing 4.5% in value, the NASDAQ increasing 6% in value and the RUT increasing 8% in value. The rally, which was the best week of the year, came after the Trump win in the election was announced. Lower corporate taxes and less regulations (something that Trump announced that he will do) was the reason and support of the rally. All indexes made new all-time highs and the RUT made a new 3-year high and closed only 48 points below the all-time weekly closing high. The outlook for the market for the rest of the year is likely to remain positive, until Trump actually takes office. By the same token, the indexes are strongly overbought as they have all rallied this year alone, between 15% (DOW) to 31% (RUT). Both the NASDAQ and the SPX have rallied 20%. The Fed did cut interest rates 25 points on Thursday but continuing to cut rates from here on in is going to be in question, given that the Trump win is also expected to bring higher inflation. As such, the charts are not presently going to offer much help as the indexes are nowhere near any levels where automatic selling by computers and algorithms can occur. By the same token, corrections are a possibility due to the overbought and possible overdone condition of the market. The Trump win does not offer a clear picture of what he will actually be able to do or not do (or the actual effects on the economy), meaning that the bulls (after this past week's strong reaction to the upside) will be careful in continuing to buy at these elevated prices. In addition, there is absolutely no support levels close-by below (within 8-10% of Friday's closing prices) that have been built and could be depended to stop a correction, meaning the bulls have to be thinking that building support will need to be done before Trump takes office as there are too many things that could go wrong in what he has promised to do that would be negative to the market economy (such as deporting all the illegal aliens). For this coming week, I have no chart comments for the indexes other than the RUT. This index is a bit of a key this week as it still has a resistance level above and failure levels below. With the RUT having rallied the largest percentage this past week and for all of this year, and having broken on Friday a decent and short-term weekly close resistance level at 2352 (closed on Friday at 2399), the bulls are "committed" to making a new all-time weekly closing high above 2437 (2442 on a daily closing basis). This also means that a close this Friday below 2352 and/or a confirmed daily close below 2360, would be a sign that the traders are not willing to take the market higher. As far as economic news this week, which could have some fundamental effect on the market, the CPI number (inflation) comes out on Wednesday (expected at 2%) and Retail Sales on Friday (expected at 3%). It is not expected that either of these reports will affect the market (unless way out of line - unexpected). Other than that, evaluation of the market at this time has to be done daily and only on a short term basis. On a daily basis and using the 10-minute chart (which at this time is somewhat indicative, given the strength seen), the line in the DOW is presently at 43040, in the SPX it is at 5869, and in the NASDAQ it is at 20600. This week and next, that line (which goes up every 10 minutes) will be short term pivotal. A break below it would suggest a that at least a pause or a drop to build support is occurring. HSI index generated a green weekly close and a new 3-week high, after having generated 4 red weekly closes in a row. The index closed in the middle of the week's trading range, suggesting equal chances of going above last week's high at 21006 as going below last week's low at 20442. The Trump win was not a positive for the index as Trump has promised to install new tariffs on China. President XI countered that by saying that a new stimulus program would occur if Trump raised tariffs. Neither the bulls accomplished anything this week but the fact that is was not a negative week, is a positive. On another slight positive chart thing, the low made on October 16th at 19977 now shows 2 successful retests of it. The index did close on the low of the day on Friday, suggesting it will start the week on Monday to the downside and below Friday's low at 20705. If the most recent successful retest at 20361 is not broken and the bulls are able to go above that retest high the next day, it will mean that there are now 3 successful retests and that "usually" means that a short-term uptrend will start.
GOLD(Dec 24 chart) reacted very negatively to the Trump win, having fallen $109 from the high made earlier in the week. Gold did generate a sell signal on the daily chart, as well as a failure signal. Nonetheless, the failure signal was subsequently negated, meaning that the bulls remain with the overall short-term edge. Gold did close in the lower half of the week's trading range, suggesting further downside below last week low at $2650 will be seen this week. Pivotal and indicative intraweek support is found at $2618, which if broken would mean that a top to the rally has been found and a drop down to the $2480-$2500 level would likely be seen. To the upside and on a daily closing basis, the resistance is now at $2729. A confirmed daily close above that level would reverse the signal given this week. Gold closed on Friday at $2694. OIL did not have a big reaction to the Trump win but that was unexpected as one of Trump's statements about winning this election is "Drill baby Drill". Such a statement would suggest lower Oil prices but that was only seen on a limited basis as Oil only dropped 4.3% in value and did not break any indicative support levels. It did have a negative reversal week, having gone above the previous week's high and then closing red and near the low of the week. suggesting further downside below last week's low at 69.75 will be seen this week. Pivotal short-term intraweek support is found at 66.72, which if then broken with the 65.72 breaking as well, it would open the door to the $60 being seen (at least). To the upside, a rally above last week's high at 72.86 would negate the present negative reaction to the Trump win. Probabilities favor the bears but the action this past week was not clear.
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Stock Analysis/Evaluation
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CHART Outlooks
At this time and until the reaction to the Trump win gets better understood, and more importantly the charts giving levels that can be depended on, there is little that can be done with any certainty. The green energy stocks took a big hit and chart-wise they look to be buys but the probability rating on them is low because the fundamental picture under a Trump administration is not positive. Nonetheless and on one of the green energy stocks that I am trading VWDRY, I will give you some levels of support that are at least dependable indicators of holding or breaking.
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Updates
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Closed Trades, Open Positions and Stop Loss Changes |
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AAPL generated a positive reversal week, having made a new 7-week low and then turning around to close green and near the high of the week, suggesting further upside above last week's high at 228.66 will be seen this week. There is a fair amount of daily close resistance between 229.79 and 230.57 that should not be broken unless the bulls are back in control. The chart is now fully built, meaning that from here some indicative mid-term action is likely to be seen. A confirmed daily close above 230.57 should cause enough buying interest to make a new all-time high above 237.29. A confirmed daily close below 222.01 would likely bring enough selling for a downside objective of $200. AXP generated a new all-time high after the announcement of the Trump win. The stock gapped up from 276.18 to 286.81. The stock did generate 3 daily closes above the previous all-time high at 285.78, meaning the breakout was confirmed. On Thursday, the stock had a red day and a close at 286.82 and that could be seen as a successful retest of the breakout. The stock closed in the upper half of the week's trading range, suggesting further upside above last week's high at 296.83 will be seen this week. All bank stocks generated the same kind of move up. The question remains as to whether the gaps generated this past week can be considered supported by news or not. Closure of the gap will be disappointing to the bulls and new selling likely to come in. At this time though, it seems likely that the stock will reach one of the rating company's objective of $300. Any daily closure below 285.78 would take away the ammunition from the bulls. The 9.2% rally from the lows of the week offers only two possible scenarios, with 1) being a new leg up in the uptrend and 2) a spike high top. We will know more in the first 2 days of this week. BCTX made a new 6-week intraweek and weekly closing low and closed near the low of the week suggesting that further downside below last week's low at .67 will be seen this week. This was surprising as the company is a small cap company and the small cap index had a very strong week. The stock closed at .69 on Friday and that is a daily close support that is short-term important. If broken, a drop down to the next and stronger daily close support at .55 is likely to be seen. 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. IBM generated a green week and a close near the high of the week, suggesting further upside above last week's high at 216.70 will be seen this week. Nonetheless, the action seen did not accomplish anything of note. There is minor daily close resistance at 213.89 and the stock closed at 213.60 on Thursday and at 213.72 on Friday and that is not a positive sign for the bulls. The next but also minor daily close resistance is found at 219.35 and indicative at 223.43. Monday's close has some importance as a red daily close will give some new ammunition to the bears, while a green close above 213.89 will do the opposite. LXRX generated a positive reversal week, having made a new 50-week intraweek low but then turning around to close green and near the high of the week, suggesting further upside above last week's high at 1.35 will be seen this week. This was a very important week due to the fact the company received negative news the previous week and the all-time intraweek low at .92 (1.01 on a weekly closing basis) was at risk of being broken. The week's low was at 1.01 so it is evident the traders were looking at that. The fact that the stock was able to generate a green weekly close does suggest that this level of support will hold up. Nonetheless, confirmation of the action is needed before any new buying occurs and for that to happen a daily and weekly close above 1.48 is needed. A daily close now below 1.19 will keep the bears in control. SNDL was on a breakout run on Tuesday, having made a new 5-month intraweek and daily closing high, but then after the Trump win was announced, the stock gave it all up and ended dropping 15% in value in the following 3 days. The stock closed on the low of the week, suggesting further downside below last week's low at 1.96 will be seen this week. Having said that, the bulls were able to stay above the 200-day MA, currently at 1.96, and if a green close occurs on Monday, some recovery will be seen. A break below 1.90 would change the chart in favor of the bears. A daily close above 2.22 would give the edge again to the bulls. VWDRY was strongly affected negatively by the Trump win, given that it is a green energy stock and Trump is against green energy. The stock lost an additional 24% in value (from 6.47 to 4.93) and closed on the low of the week, suggesting further downside below last week's low at 4.93 will be seen this week. There is intraweek support at 4.77 and pivotal at 4.50. The former is likely to be seen this week and a recovery rally from there occur, with a potential 7.11 objective over the next 3-5 months. Nonetheless, the fundamental outlook in the U.S. has changed with Trump not being supportive of this type of energy. This is a Danish company, meaning not totally dependent on the U.S. but the need for the product in the rest of the world does need to increase. At this time though, and until Trump takes office and makes things clearer, the $7 level is now going to be strong resistance. ZLAB generated a small positive reversal week, having gone below the previous week's low and then closing green. The stock closed slightly in the lower half of the week's trading range, suggesting a slightly higher chance of going below last week's low at 29.85 than above last week's high at 31.61. This being a Chinese stock, the fundamental picture is not clear as to the Trump win. On the daily and weekly closing chart, the 29.99 level remains short-term pivotal. A confirmed close below that level would suggest a drop back down to the $25 area will happen. A confirmed daily close above 33.18 would suggest a rally up to the $40 will 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 30.62. 2) ENG - Averaged long at 18.30. No stop loss at present. Stock closed on Friday at 1.29. 3) VWDRY - Averaged long at 8.68 (4 mentions). No stop loss at present. Stock closed on Friday at 4.97. 4) LXRX - Averaged long at 1.63 (5 mentions). No stop loss at present. Stock closed on Friday at 1.27. 5) BCTX - Purchased at .775. No stop loss at present. Stock closed on Friday at .69 6) SNDL - Averaged long at 9.05 (2 mentions). No stop loss at present. Stock closed on Friday at 1.98. 7) IBM - Shorted at 218.74. No stop loss at present. Stock closed on Friday at 213.72 8) AXP - Averaged short at 252.16 (3 mentions). Stock closed on Friday at 287.60. 9) AAPL - Shorted at 227.57. No stop loss at present. Stock closed on Friday at 226.97. 10) DD - Covered shorts at 81.57. Shorted at 82.07. Profit on the trade of $50 per 100 shares.
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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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