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Issue #881 
October 6, 2024 , | Newsletter
The newsletter with chart analysis for stocks and stock indexes |
Stock Indexes Analysis/Evaluation
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| Bulls in control. Bubble idea is less of a possibility now!
DOW Friday Closing Price - 42352 All indexes, with the exception of the RUT, made new all-time or rally weekly closing highs. This was due to the Jobs report that came in surprisingly better than expected, meaning that the economy continues to outperform expectations. Having said that, the new highs were mostly insignificant with all the indexes failing to go above the previous week's intraweek highs, and on a weekly closing basis, the DOW making a new weekly closing high by just 39 points, the SPX by only 13 points, the NASDAQ by only 27 points and the RUT closing red by only 12 points. What this suggests is that the good news is not generating the kind of moves that suggest that it will continue and it also suggests that the Fed might not be as aggressive in lowering interest rates as was anticipated (50 points in November). As such and overall, the market remains overbought and the volatility index (VIX) remains high (closed on Friday at 19.23), meaning that a correction is likely to start soon as further good news is unlikely to be seen for now. The indexes did close on or near the highs of the week, suggesting further upside above last week's highs (DOW at 43361, SPX at 5765, NAZ at 200072 and RUT at 2234). If the recent all-time or rally intraweek highs (DOW at 42628, SPX at 5767, NAZ at 20273 and RUT at 2259) are not taken out this week, profit taking will likely be seen and a correction begin. Nonetheless, it is important to note that at this time and with the recent fundamental news, a correction is what is likely to happen and not necessarily an end to the uptrend. The important news this week doesn't begin to happen until Thursday when the CPI inflation number comes out. On Friday, the PPI number comes out, as well as the beginning of the earnings quarter with JPM and WFC reporting. This does suggest that the bulls are committed to making new highs early in the week because if they don't and the news is not better than expected, more profit taking interest will be seen. Here are the daily close supports that if broken any day this week, will generate automatic selling interest. In the DOW the level is at 41914, in the SPX the level is at 5699, in the NASDAQ the level is at 19773 and in the RUT the level is at 2180. It is unlikely that the reports this week will be so "way out of line" as to generate any catalytic action. This means that this is a week where charts will play a big role. To the upside the all-time intraweek highs are somewhat pivotal and to the downside, the daily close support are somewhat pivotal. With the reports not likely to be seen as being catalytic, the traders are likely to start giving signs of their intent as early as Monday. The high VIX suggests that the market is likely to start seeing some down movement. HSI rallied an additional 8.9% this past week, meaning that over a period of 4 weeks, the index has rallied 25.4%. The index made a new 31-month intraweek and weekly closing high and closed above a very important and likely pivotal weekly close resistance at 22689 (closed at 22723). The index closed on the high of the week, suggesting further upside above last week's high at 22736 will be seen this week. If this close is confirmed with another green close this Friday, and especially if it is above 23235, it will mean the index has changed course and is no longer in the downtrend that was seen the past 2 years. There is a fair amount of weekly close resistance from previous low weekly closes at 22803, 22930, 23192 and at 23235. Those 4 low weekly closes held up the index for a period of 23 months (between 3/20 and 2/22. When broken, it took the index all the way down to 14595. As such, this whole area here is of major importance, as a confirmed break (above all of these 5 levels) would mean that the weakness seen in the Chinese market over the past 2+years has been totally erased and that a sideways market, between 19000 and 24000 would be seen for the next 3-6 months.
GOLD(Dec 24 chart) had an inside week and a close at the same level as the previous week, as well as a close in the middle of the week's trading, suggesting equal chances of going above last week's high at $2694 as going below last week's low at $2646. The chart is showing a potential bullish flag formation, which if broken (above $2695) would give a $2782 objective. On the other side of the coin, if Gold goes below $2646, a drop down to at least $2600 would occur and perhaps as low as $2570. At this time, there doesn't seem to be any big negatives that could happen to Gold. OIL generated a positive reversal, having gone below the 2 previous week's intraweek lows and the closing above the highs seen those 2 week. News did come out from OPEC that they were considering further production cuts and also the Israel/Iran war that has escalated and puts Iran's Oil production at risk. The action seen did accomplish three chart things, with the first being a buy signal (a close above the most recent high weekly close at 71.92), the second being a failure signal (closing above a previous and pivotal low weekly close at 73.52) and the third being a successful retest of the recent downtrend weekly closing low at 67.67 (closed the previous week at 68.18 and the closed on Friday at 74.38). Oil closed near the high of the week, suggesting further upside above last week's high at 75.57 will be seen this week. There are 4 intraweek resistance levels above with the first one at 76.91, the second at 77.60, the third one at 78.88 and the fourth one (and decent) being between 80.16 and 80.62. To the downside and on a daily closing basis, the 79.93 level is now indicative and short-term pivotal support. It does seem like Oil will be trading between $70 and $80 for the next month or two.
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Stock Analysis/Evaluation
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CHART Outlooks
There are no new mentions this week. The only thing that can be considered at this time are short positions but then again, the trend is up and there are no shorts at this time that offer even a 50-50 chance of succeeding, meaning that one cannot short a stock at this time with any amount of confidence. With the fundamental news that came out this week, it has even become more difficult to short. By the same token, the upside is limited and that means that purchases require cherry picking stocks that are still not overbought and that are likely to receive fundamental good news (earnings) before even considering. There are none that have earnings reports due out this week.
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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 10/1 Profit of $3,679 using 100 shares per mention Closed out profitable trades for September per 100 shares per mention
NONE
Closed positions with increase in equity above last months close.
BABA (long) $4302 Total Profit for September, per 100 shares. $8,066 Closed out losing trades for September per 100 shares of each mention.
NONE
Closed positions with decrease in equity below last months close.
FSLR (long)$120 Total Loss for September, per 100 shares $120 Open positions in profit per 100 shares per mention as of 10/1
NONE
Open positions with increase in equity above last months close.
SNDL (long) $18 Total $2,958 Open positions in loss per 100 shares per mention as of 10/1
AXP (short) $1151
IBM (short) $234 Open positions with decrease in equity below last months close.
AXP (short) $2510 Total $5,929 Status of trades for month of September per 100 shares on each mention after losses subtracted.
Profit of $4.973
Status of account/portfolio for 2024, as of 9/31Profit of $8.652 per 100 shares.
AAPL generated a negative reversal week, having gone above the previous week's high and then below the previous week's low and closing red and in the lower half of the week's trading range, suggesting further downside below last week's low at 223.02 will be seen this week. The stock has underperformed the market due to some fundamental negatives that have recently occurred. The stock does show a triple intraweek high at 232.92, at 233.02 and at 233.09 and that is magnet for breakage. To the downside, there is intraweek support at 213.92 that does not look breakable at this time. The 200-day MA is currently at 215.98 and that is likely to be a magnet this week. Consideration should be given to taking profits there. AXP made another new all-time intraweek and weekly closing high and closed near the high of the week, suggesting further upside above last week's high at 276.79 will be seen this week. The stock has outperformed its own fundamental outlook but is now in overbought territory. Nonetheless, the impressive move up on Friday (3%) suggests that a bullish flag formation has been built and broken and that flag formation gives an upside target of $299. The company reports earnings on the 18th but the financial earnings reports that start coming out this Friday could have a negative effect if lower than anticipated. A daily close below 271.20 would negate the bullish flag. BCTX generated a buy signal this week, having closed above the previous high weekly close at .864 (closed on Friday at .982). If the buy signal is confirmed this coming Friday, it will mean that a bottom to the downtrend has been found at .559, which has also been successfully tested with a close 5 weeks ago at .560 (making it a strong double bottom). The fundamentals have changed with this company, due to one of its drugs showing success in treating breast cancer and now several rating companies have it as a strong buy with an average 1-year objective of $11. Any weekly close below .864 would negate the breakout. A daily close above 1.24 would suggest the 200-day MA, currently at 2.15 would be the immediate objective. DD underperformed the market and ended up not following through to the previous week's close on the high of the week and generating a red weekly close near the low of the week, suggesting further downside below last week's low at 86.62 will be seen this week. The downside objective is a retest of the previous weekly closing high at 84.97. Nonetheless and on an intraweek basis, there is no existing support until 81.75 is reached. One thing to watch is that there is a runaway gap between 84.21 and 84.66 that is targeted for a retest. If that gap is closed, it will make the breakaway gap at 80.84 a target for closure. Any rally above last week's high at 90.06 would make the $100 level a target. IBM generated a positive reversal week, meaning that it went below last week's low and then closed at a new all-time high. The stock closed on the high of the week, suggesting further upside above last week's high at 226.08 will be seen this week. The positive reversal does make the probabilities of further upside high, meaning that consideration should be given to covering the short position and taking the loss. Last week's low at 215.80 has now become short-term pivotal support, which if broken would suggest the top has been found. A drop back to 223.40 should be seen this week and that is the price to consider covering the short. LXRX generated an up week and a close on the high of the week, suggesting further upside above last week's high at 1.65 will be seen this week. Nonetheless, the bulls did not accomplish anything of note, so the outlook remains the same (sideways for now). Short-term pivotal daily and weekly close resistance is found at 1.70, which if broken would suggest the 200-day MA, currently at 1.88 will be seen. A break below 1.48 would be a negative to the stock. SNDL nothing new to report here as things remain in the same trading range as has been seen for the past 18 weeks. Having said that, there is short-term pivotal intraweek support at 1.81 and at 1.84. A break of 1.84 will weaken the chart slightly and a break below 1.81 would likely cause the stock to drop down to 1.64 (based on a weekly close). Only a daily close above 2.22 would give the bulls a new edge. Stock closed on Friday at 1.99. The stock did close near the low of the week and further downside below last week's low at 1.94 is expected to be seen. The 200-day MA, currently at 1.89, beckons and likely will be reached this week. That line has held up since March 22nd and is likely to hold up and generate a recovery rally from there. VWDRY generated a new 11-month low and closed near the low of the week, suggesting further downside below last week's low at 6.72 will be seen this week. Having said that, the stock closed at the bottom of a channel line that started 24-months ago and has two points on it. With no tangible negative change to the fundamental picture, this level should hold up and a rally being with the top of the channel (currently at 10.55) as the objective for the end of the year. Pivotal weekly close support is found at 6.51. A daily close above 7.20 would generate a failure signal against the bears and bring in new buying interest. ZLAB generated a new 9-month intraweek and weekly closing high and closed on the high of the week, suggesting further upside above last week's high at 26.42 will be seen this week. The stock confirmed the failure signal against the bears given the previous week and doubled up on it, having closed above another important low weekly close at 23.75 that held up for 16 months before being broken. There is open air above to 27.87 but the stock is reaching an important area where a breakaway/runaway gap to the downside is found. The runaway gap is at 28.80 and the breakaway gap is at 30.11. Closure of those two gaps would be a statement that the downtrend is fully over. Pivotal intraweek resistance is found at 31.22, which if broken would mean the stock is in an uptrend. Pivotal support is found at 20.17 but if Thursday's low at 24.40 is broken, the potential breakaway gap at 22.87 will become a magnet. By the same token, any gap up this week would strengthen the chart even more.
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1) ZLAB - Averaged long at 65.50 (7 mentions). No stop loss at present. Stock closed on Friday at 26.36. 2) ENG - Averaged long at 18.30. No stop loss at present. Stock closed on Friday at 1.30. 3) VWDRY - Averaged long at 8.68 (4 mentions). No stop loss at present. Stock closed on Friday at 6.86. 4) LXRX - Averaged long at 1.5447 (4 mentions). No stop loss at present. Stock closed on Friday at 1.65. 5) BCTX - Purchased at .775. No stop loss at present. Stock closed on Friday at .984 6) SNDL - Averaged long at 9.05 (2 mentions). No stop loss at present. Stock closed on Friday at 2.00. 7) JD - Liquidated at 45.82. Averaged long at 22.74. Profit on the trade of $4616 (2 mentions). 8) IBM - Shorted at 218.74. No stop loss at present. Stock closed on Friday at 226.00. 9) AXP - Averaged short at 252.16 (3 mentions). Stock closed on Friday at 275.97. 10) FSLR - Covered shorts at 228.58. Profit on the trade of $279 per 100 shares. 11) AAPL - Shorted at 227.57. No stop loss at present. Stock closed on Friday at 226.80. 12) DD - Shorted at 82.07. No stop loss at present. Stock closed on Friday at 87.54.
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Encyclopedia of Chart Patterns. A must have for chart aficionados! |
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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