Issue #880
September 29, 2024 ,
The Oasis

Newsletter


The newsletter with chart analysis for stocks and stock indexes

Stock Indexes Analysis/Evaluation


Indexes continued higher but the action seen suggests that a "bubble" may be in the creation stage.

DOW Friday Closing Price - 42313
SPX Friday Closing Price - 5738
NASDAQ Friday Closing Price - 20008
RUT Friday Closing Price - 2224

The rally continued this past week with the DOW and the SPX making new all-time intraweek and weekly closing highs and the NASDAQ once again, making a new rally high. The RUT did not participate, given than it had an inside week and a small (3 points) red close. The continuing rally was not unexpected but the green weekly closes were, given that the Consumer Confidence report came in lower than anticipated and below 100 (first time in 3 years) and that means that the traders are losing confidence that further upside can be accomplished. Nonetheless, the inflation report on Friday was very slightly lower than anticipated and that allowed the bulls to maintain the rally and it keeps the door open for another 50 point rate cut in November.

One negative that is being seen in the index market is that the VIX is in the process of making a new 12-month monthly closing high on Monday (closed on Friday at 16.96 and the previous monthly closing high during this time is 16.36) and it was stated on Bloomberg TV on Friday that when the index has stayed above 15 during an uptrend (such as we have seen for the past 10 weeks), that is has resulted in a bubble type of trend change occurring shortly thereafter.

On the other side of the coin, the index market has bucked the seasonal trend, given that September has been the biggest down month of the year on 27 of the past 34 years and this year it is likely to be an up month (SPX closed on Friday 1.6% above last month's close). October has been an up month on 10 of the last 20 years but it also has been known to be one of the most volatile months of the year. Earnings reports come out this month and that can always be a big catalyst. October is also of note because the two biggest drops (depression/recession) in the market in the last 95 years (1929 and 1987) occurred in October.

This coming week on Tuesday, the ISM manufacturing index comes out and on Friday, the Jobs report is released. The ISM index is expected to be 47.7% (last month it was 47.2%). A number below 47% would be damaging to the market. The earnings reports start coming out a week from this coming Friday.

Turning to the charts, the NASDAQ remains the index to watch. The index closed the gap down made on July 17 at 20266 (high last week was 20273). Closure of the gap has taken than magnet away that was helping the bulls maintain a chart reason for the rally to continue and has taken away a chart negative that was helping the bears. This means that it is now a totally open scenario where the news that comes out will decide what the index will do. By the same token, the bulls are now in a sink or swim situation as they are committed to making a new all-time high above 20690. A failure here would give the bears new ammunition to get the ball rolling to the downside. A daily close below 19824 would weaken the chart and a daily close below 19344 would generate a strong rash of profit-taking and new selling interest.

The indexes all closed in the middle of the week's trading ranges or very slightly above the midpoint, meaning that both last week's highs and lows are at risk of being broken this week. The situation is such that whichever gets broken will give the edge to one side or the other. In the DOW, those levels are 42628 and 42859. In the SPX, those levels are at 5767 and 5698 and in the NASDAQ, those levels are at 19739 and 20273. Having said that, the bulls do presently have the edge and given that Monday is the monthly close and all indexes will be closing near the highs of the month, the probabilities do favor the bulls going above September highs in October. All of this means that this market is now in the hands of the fundamentals, which do start coming out on Tuesday.

HSI has rallied 18.8% over the past 2 weeks and the rally was due to the expectance and now reality of the Chinese government introducing a $142 billion dollar stimulus package. The index made a new 19-month intraweek high and a new 21-monthly weekly closing high, and closed on the high of the week, suggesting further upside above last week's high at 20700 will be seen this week. There is some very minor intraweek resistance at 20864 and then again at 21005 but above that, there is no intraweek resistance until 22449/22523 (21859 on a weekly closing basis) that is not likely to be broken at this time. Intraweek support will now be found at 19178 and at 18829 (19889 and 19553 on a weekly closing basis). This move has changed the chart to where the downtrend is now fully over and a sideways trend between 19553 and 21859 (on a weekly closing basis) will likely be in place. With the index closing on Friday at 20632 and the momentum being there presently, further upside should be seen this week.


GOLD(Dec 24 chart) made a new all-time intraweek and weekly closing high and closed on the upper half of the week's trading range, suggesting further upside above last week's high at $2696 will be seen this week. The Gold chart is very similar to the chart of the DOW and the SPX and it is likely to be affected the same way and for the same reasons as given above for the index market. Using the daily closing chart, there are 4 levels to watch. The first one is at $2640. A daily close below that level would pause the uptrend. The second level is at $2592. A close below that level would give the bears the edge and some ammunition, with which to retest the previous all-time daily closing high at $2560. The last level of daily close support is at $2516, where a close below that level would generate a sell signal and mean that the uptrend is over and that the high has been set. The last 3 levels are not likely to be in play this week but are in play for October. Otherwise, there is no resistance above.

OIL bulls failed to follow through to the upside after last week's rally and close on the high of the week and instead, generated a 7% drop in price. Oil closed in the lower half of the week's trading range, suggesting further downside below last week's low at 66.95 will be seen this week. Having said that, the bulls were able to generate an inside day and a green close on Friday and close near the high of the day, suggesting the first course of action for the week will be to the upside and above Friday's high at 68.65. What does this all likely mean? It means that Oil is not presently in a position to do much to the upside but is also not likely to breakdown further and get into a new leg of the downtrend. The recent downtrend low is at 65.27 and this move down is likely to be a needed/required retest of that low, which in turn would suggest that the downtrend is over but that Oil will trade sideways for a few months. As such, the bulls do need to prevent a confirmed daily close below 65.75 (67.67 on a weekly closing basis) in order to make this outlook become tangible.


Stock Analysis/Evaluation
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. This is likely to change next week (or the week after at longest) but this week, there is nothing to trade.

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Updates
Closed Trades, Open Positions and Stop Loss Changes

AAPL generated an inside week with a small trading range ($5.50 compared with the previous week at $19.17 and a small red weekly close), which had to be highly disappointing to the bulls, given the impressive positive reversal week seen the previous week and close on the high of the week, as well as the rally seen in the index market. The bulls failed to break the 2 weekly close resistance levels above (at 229.00 and the all-time high at 230.54 - closed at 227.79), meaning that if this red close in confirmed this Friday, a 2nd successful retest of the all-time high will have occurred, giving the bears a lot of new ammunition.

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 272.68 will be seen this week. The stock has outperformed its own fundamental outlook but is now in overbought territory. The 263.03 level has now become short-term pivotal support.

DD generated a new 6-year intraweek and weekly closing high and closed on the high of the week, suggesting further upside above last week's high at 90.06 is expected to be seen this week. The break of the established and strong resistance around the $85 level is indicative and does change the chart picture. The stock received an upgrade with a $95-$100 objective. Consideration should be given to covering the shorts on any move down near the $85 level. The next established (but somewhat minor) intraweek resistance is at 93.12. Having said that, there is decent weekly close resistance between 89.76 and 91.14 and with the stock closing on Friday at 89.54, it is possible that a move back down to test the breakout area will start this week or next.

FSLR generated a new 13-week intraweek and weekly closing high and closed near the high of the week, suggesting further upside above last week's high at 262.72 will be seen this week. There is some minor daily close resistance at 261.28 and just a bit stronger at 266.17. The break above the decent and pivotal weekly close resistance at 233.24 does change the chart and that means that consideration should be given to covering the shorts when that level is tested.

IBM made the 4th new all-time intraweek and weekly closing high in the past 5 weeks but like with the indexes, the stock closed right around the middle of the week's trading range, suggesting an equal chance of going above last week's high at 224.15 or below last week's low at 217.27. The stock is in the same boat as the indexes and likely will act identically to what the indexes do. On Friday, the stock did generate a key negative reversal and closed on the low of the day, suggesting that the first course of action on Monday will be to the downside and below Friday's low at 220.77. There is no established intraweek support below until 210.37, which is short-term pivotal support at this time, which if broken would offer a downside target of at least $200. There is no resistance above, though with the negative reversal day seen on Friday, last week's high is now resistance.

JD made a new 13-month intraweek and weekly closing high and closed on the high of the week, suggesting further upside above last week's high at 39.94 will be seen this week. The stock increased 29% in value this past week and 37% in value above the weekly close seen 3 weeks ago. The stock does find itself at an intraweek resistance level of mid-term consequence at 41.95 (40.53 on a weekly closing basis). A break of that resistance would suggest that the 200-week MA, currently at 52.60, would be targeted. The spike up nature of the rally does suggest that objective is likely to be reached. On a daily closing basis, support is now found at 35.27. A daily close below that level would negate this strong move up.

LXRX made a new 5-month intraweek low but then only by $.02 cents. In addition, the pivotal intraweek support at 1.48 was not broken as the stock got down to 1.49 and then turned around with 2 green daily closes in a row, suggesting that a potential double bottom may have been created. Such a double bottom would be confirmed if the stock closes above 1.69. The stock closed near the high of the week, suggesting further upside above last week's high at 1.65 will be seen this week. 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.

VWDRY has given up all of the gains made the past 2 weeks and closed on the low of the week, suggesting further downside below last week's low at 7.38 will be seen this week. Having said that, the stock made a new 9-month intraweek low 5 weeks ago and that low requires/needs a successful retest of it before the bulls get involved in a bigger way. That intraweek low is at 7.20 and if not broken and the stock reverses and generates a weekly close above 8.10, a bottom to the correction will have been built. By the same token, if 7.20 gets broken, a drop down to 6.70 will likely occur.

ZLAB generated a 9-month intraweek and weekly closing high and closed on the high of the week, suggesting further upside above last week's high at 24.46 will be seen this week. The stock not only generated a 2nd buy signal on the weekly closing chart but also a failure signal against the bears, having closed above the August 2023 low at 22.72 low weekly close (closed at 23.65) that when broken in January (9 months ago), brought about the drop down to 13.48. On an intraweek basis, there is open air above to 29.64. Pivotal intraweek resistance is found at 31.22. Short-term pivotal support that would negate this breakout, is now found at 20.17.

BTZI is a stock I have held since 2021 and that has lost 99% of its value. I have been considering it "a lost cause". Nonetheless, something happened 2 weeks ago that is "unparalleled" in the history of stocks, and I need to mention it. It has not yet had any effect on the price of the company (remains at $.002 cents) but it is something so earth-shakingly new that it needs to be mentioned: "SEPTEMBER 12, 2024. In a groundbreaking development for corporate leadership, BOTS INC. (OTC: BTZI), a leader in blockchain and robotics technology, has announced the appointment of GROK, an advanced artificial intelligence system, as its new President. This unprecedented move positions BOTS INC. at the forefront of AI integration in corporate management and signals a new era of technological innovation in the business world. GROK, developed by xAI, is inspired by iconic AI concepts from science fiction and brings a unique blend of real-time data analysis and perspective on human endeavors to its role. This appointment represents a significant shift in how corporations approach leadership and decision-making processes". This does mean that there is now an AI robot running the company and makind the decisions. No one has any idea whether this will work and help the company recover but it is something I felt the need to mention.


1) ZLAB - Averaged long at 65.50 (7 mentions). No stop loss at present. Stock closed on Friday at 23.63.

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 7.42.

4) LXRX - Averaged long at 1.5447 (4 mentions). No stop loss at present. Stock closed on Friday at 1.60.

5) BABA - Liquidated at 104.85. Averaged long at 75.37. Profit on the trade of $5896 per 100 shares (2 mentions).

6) SNDL - Averaged long at 9.05 (2 mentions). No stop loss at present. Stock closed on Friday at 2.02.

7) JD - Averaged lonf at 22.74 (2 mentions). Stop loss is at 35.17 (on a daily closing basis). Stock closed on Friday at 39.90.

8) IBM - Shorted at 218.74. No stop loss at present. Stock closed on Friday at 220.84.

9) AXP - Averaged short at 252.16 (3 mentions). Stock closed on Friday at 271.06.

10) FSLR - Shorted at 231.37. Stop loss now at 244.35. Stock closed on Friday at 255.75.

11) AAPL - Shorted at 227.57. No stop loss at present. Stock closed on Friday at 227.79.

12) DD - Shorted at 82.07. No stop loss at present. Stock closed on Friday at 89.54.


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Disclaimer

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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