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Issue #922 
Aug 3, 2025 , | Newsletter
The newsletter with chart analysis for stocks and stock indexes |
Stock Indexes Analysis/Evaluation
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| Correction has started!
DOW Friday Closing Price - 43588 This last week turned out to be likely indicative for the short term. On the plus side, earnings were better than expected (in some cases much better than expected), GDP was also better than expected, and the manufacturing number followed that pattern. Nonetheless, on the opposite side, two negative things occurred, with the first being Friday's announcement that job growth shrank more than expected and secondly Trump announcing that his tariffs were now in place and not to be changed unless a deal with each country occurred. The SPX and NASDAQ both made new all-time intraweek highs on Thursday and then generated a key negative reversal week on Friday, having closed red and below the previous week's low (in the DOW, an intraweek drop of 1325 points from the high made on Thursday, in the SPX at drop of 215 points, in the NAZ a drop of 884 points and in the RUT, a drop of 92 points) . The DOW and the RUT failed to go above the previous week's highs and then proceeded to break short-term pivotal intraweek supports (in the DOW at 43758 and in the RUT at 2184). All of this action strongly suggests that the index market is now in a corrective phase for the short-term (likely 1-2 months at least). Adding to all of this, August is a seasonal negative month that usually does not turn around until the latter part of September or the first part of October. Last but not least, the index market has been in a strongly overbought condition for a month or two, meaning that with no possibly catalytic reports due out until the first week of September, everything points to lower prices the next few weeks. In looking at the charts and in searching for levels of support where computers and algorithms will kick in with automatic buying interest, the DOW chart suggests that a potential and likely objective is the 41647 to 41844 level. In the SPX and the NASDAQ, the previous all-time weekly closing highs at 6114 and at 22114 are the likely objectives. In the RUT the 2080-2100 level is the objective. Mind you, these are chart objectives that are likely to be reached because of the action and fundamental news that came out this week. Nonetheless, this is still a market that is uncertain fundamentally as to what the future brings (due to the Tariffs and Trump decisions), meaning that these objectives are dependable but not to the degree they would "normally" be. More or less continues to be possible. To the upside, all indexes generated a gap down on Friday on the daily chart, meaning those gaps are magnets, either to be closed or simply tested. Based on the news that did come out, probabilities do not favor those gaps being closed at "this time" (more likely to be closed in September or October, if closed at all). Those gaps are at DOW 44049, SPX at 6327, NASDAQ at 23176 and RUT at 2207. There is one thing to watch for this week and that is if another gap down occurs on Monday (or at any time later in the week). Friday's low in the DOW is at 43340, in the SPX it is at 6212, in the NASDAQ it is at 22673, and in the RUT it is at 2143. A gap down on Monday would generate a breakaway/runaway gap formation that would give additional and strong fuel to the bears (if the gaps are confirmed), meaning that reaching the downside objectives (stated above) would become highly probable. It also needs to be mentioned that in the SPX and the NAZ there is a close by intraweek support that if broken would automatically generate more selling. Those two levels are at 6201 and at 22587. The charts, the news and the short-term outlook all point to lower prices, with the only question being the time frame and the way those lower objectives will be reached. HSI Index generated a drop of 4.6% this week (from the high to the low of the week) and closed on the low of the week, suggesting further downside below last week's low at 24484 will be seen this week. The bulls were able to prevent a failure signal be given on the weekly chart, having closed at 24507 and the previous high weekly close (made in March) being at 24237 (on a daily closing basis, at 24474). Nonetheless, the economic news that came out this week (manufacturing) was lower than expected and that started the correction. In addition, with no tariff deal with Trump having made yet, the tariffs continue to weigh on the index. The thing to watch for at the beginning of the week is the 24474 level on a daily closing basis. That level is just 33 points below the close on Friday and if that level generates a confirmed failure signal, further downside will occur, with a downside target of at least testing the next daily close support level at 23892. If that level is broken, the bears will be back in control. To the upside, the bulls need a green close to occur on Monday and if that happens, a rally back up to as high as 25400 could be seen. Probabilities favor the bears.
GOLD(Dec 2025 chart) was under sell pressure at the beginning of the week but then on Friday (after the tariffs announcement came out), Gold rallied to close out the week with a positive reversal week (new 4-week intraweek low and a green weekly close), and closed at the high of the week, suggesting further upside above last week's high at $3416, will be seen this week. The tariffs announcement is inflationary and as such, this move is likely indicative. Gold did not generate any new signals but the chart action has now made the $3362 level (on a daily closing basis), the new short-term pivotal support level, which if broken would give some control to the bears. On a daily closing basis, the next resistance level is found at $3422 (minor) and at $3452 (short-term pivotal, which if broken would suggest the all-time high daily close at $3501 would be tested. OIL generated a green week in which a new 5-week intraweek high was made. Nonetheless, at the end of the week and due to the tariff announcement, Oil fell back to close slightly in the lower half of the week's trading range, suggesting a slightly higher probability of going below last week's low at 65.10 than above last week's high at 70.51. On a daily closing basis, Oil did generate a buy signal on Wednesday (closing above 68.25), which was then negated on Friday with the close being at 67.33. On the weekly closing chart, Oil close slight above the resistance at 67.02 but not by enough to be convincing. As such, this week is uncertain, with the bears having a very slight advantage. The two daily close levels to watch this week is 68.90 and 65.15. Whichever gets broken, will give the short-term edge to either side. Overall, the chart does not suggest this week will be pivotal either way.
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Stock Analysis/Evaluation
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CHART Outlooks
This week it is all about short positions but in looking around, almost all short positions do not offer risk/reward ratios that are attractive. I did find a couple of trades that can be done but the trades do have conditions that need to occur, in order for them to be instituted.
MMM Friday Closing Price - 144.41
MMM has generated 3 red weeks in a row and as such, does not presently (at this price) offer a good risk/reward ratio. Nonetheless, the stock does have a short-term pivotal intraweek support at 140.78, which if broken, would open the door for a drop down to $127. In addition and if broken, the stock would then show intraweek resistance at 141.34, meaning that using a stop loss at 141.44 would then offer a good risk/reward ratio. The only caveat to this is that the stop loss could not be placed until 2 days after the break, meaning the stock would need to be watched using the intraday chart for making a decision whether to get out (or not) depending on the action after the break of 140.78 occurs.
Having said that, the risk/reward ratio in this scenario would be 20-1. Probability number would be 3 (on a scale of 1-5, with 5 being the highest).
TNC Friday Closing Price - 81.11
TNC offers the same kind of scenario as MMM offers with pivotal intra-week support found at 78.57, which if broken, would open the door for a drop down to 70.37. If that level of support is broken, intraweek resistance would then be at 80.52. Using a stop loss at 80.62, the trade would then offer a 3-1 risk/reward ratio. It is important to note that the 200-week MA is currently at 80.49, meaning that if 78.57 is broken, the short trade would have a decent probability rating.
Having said that, TNC does offer another potential trade with a lower probability rating (due to pivotal intraweek support not breaking), with shorting the stock on a rally back up to the 200-day MA, currently at 81.66, and using a stop loss at 85.08 (very valid stop loss as a break of the resistance at 84.98 would be a bullish statement - which at this time is not likely to happen) and using the same downside objective, which would still be a 3.2-1 risk/reward ratio). Then again, this stock reports earnings on Wednesday after the close, so that needs to be kept in mind.
HUM Friday Closing Price - 247.26
The HUM short trade is different from the other two, given that no support level needs to be broken in order to short the stock, but then again, the stock needs to rally in order for the short trade to be instituted and that is a coin toss as to whether it will happen. The stock does have both fundamental and chart reasons to drop, first of all because it is a Medicare/Medicaid health company that will be strongly affected by Trump's bill to cut those, but also because it recently got up to the 200-day MA (currently at 260.09) and failed to break it. That line has not been broken for 9 months and continues to be a strong resistance.
HUM this past week got close to the 200 10-minute MA (currently at 243.76) and did not break it. It rallied on Friday and the probabilities now favor a rally all the way back up to at least the 251.18 level, or perhaps 252.58 (based on the daily chart). The lower level will be the desired entry point.
To the downside, HUM does not show any decent support until the $212/$213 level, which will be the objective of the mention. There is an open gap at 237.28 but there is also some minor-to-perhaps decent intraweek support between 242.22 to 243.65, which will need to be broken for the gap to be filled. Nonetheless, if the gap is closed (likely), a drop down to at least $220 will likely occur.
This is a high probability trade with my rating being a 4 (on a scale of 1-5) but the big question being whether the desired entry point is reached and the second point of doubt is the stop loss at 255.41, which is decent but not great. The great stop loss would be at 265.35 but getting in at 251.18 would only offer a 2.8-1 risk reward ratio. With the stop loss being at 255.41, the risk/reward ratio is 9-1.
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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 2025, as of 7/1 Profit of $16,217 using 100 shares per mention Closed out profitable trades for July per 100 shares per mention
IBM (short) $3344 GM (short) $415 Closed positions with increase in equity above last months close. TXN (short) $5922 Total Profit for July, per 100 shares. $9,681 Closed out losing trades for Julye per 100 shares of each mention.
NONE
Closed positions with decrease in equity below last months close.
MMM (short) $404 Total Loss for July, per 100 shares 1,451 Open positions in profit per 100 shares per mention as of 8/1
NONE
Open positions with increase in equity above last months close.
LXRX (long) $84 Total $2.424 Open positions in loss per 100 shares per mention as of 8/1
NONE
Open positions with decrease in equity below last months close.
BCTX (long) $444 Total $1,198 Status of trades for month of July per 100 shares on each mention after losses subtracted.
Profit of $9,456
Status of account/portfolio for 2025, as of 6/30Profit of $25,673 per 100 shares.
BCTX generated a new all-time weekly closing low and closed near the low of the week, suggesting further downside below last week's low at .71 will be seen. Having said that, the all-time intraweek low is .69 and that wasn't broken, meaning that the stock could get down as low as that and if it turns around and the following week goes above this coming week's high, a double bottom will be created. The news that did come out last week was all potentially bullish as the raised capital (selling of additional shares) that created this most recent fall has been put to use in several potentially positive ways, having brought in B>UCLA health into the cancer research, granted a New Zealand patent of vaccines, and having unveiled the new release of TILsRX platform for supercharging immune responses. Resistance is now found at last week's high at .825. A break above that would give the bulls new ammunition. LXRX generated a second red week but then closed very slightly above last week's trading range, suggesting a slightly higher probability of going above last week's high at 1.13 than below last week's low at 1.00. Since the stock generated a failure signal of consequence against the bears 4 weeks ago, a retest of that previous low weekly close support at 1.01, as well as of the previous high weekly close at.99 (which brought about the rally to 1.43, a retest of that area has been expected. If this area around $1 (based on daily and weekly closes) holds up, the bulls will gain strong ammunition for generating a test of 200-week MA, currently at 2.01. Pivotal intraweek support is found at .80. Stock closed on Friday at 1.07. The stock will be reporting earnings on Wednesday before the opening bell. TCEHY generated an inside week but closed red and below the previous high weekly close at 68.22 (closed at 67.91), meaning that a failure signal against the bulls did occur. The same thing happened on the daily closing chart, with the previous high daily close being at 68.79. The stock did close near the low of the week, suggesting further downside below last week's low at 67.39 will be seen this week. There is no intraweek support until 64.89 is reached. With the bulls failing to get above the 4-year intraweek high at 71.82 and giving these failure signals, it has weakened the chart enough that a drop down below the original entry point for the short position at 66.15 is now likely to be seen. Taking the small profits when that happens, is to be considered as the chart is presently not leaning to any side, meaning that the original reason for the short has disappeared. Intraweek resistance is now found at 69.99, which if broken, would give the edge back to the bulls. VWDRY generated a red week and closed near the low of the week, suggesting further downside below last week's low at 5.99 will be seen this week. The stock did generate an indicative and bullish new 10-month intraweek high, as well as a failure signal against the bears, the previous week when it broke above 5.94. Then again, there is a 2nd area of previous low weekly close support at 6.51 and though the stock closed 6.54 the previous week, the potentially 2nd failure signal against the bears was not confirmed. This means that the weekly close support at 5.94 is to be tested before the bulls try to go higher. In looking at the daily closing chart, there is a lot of support between 5.62 and 5.84, with the latter not likely to be broken. A close below that area would erase the breakout. A daily close above 6.19 would give the edge back to the bulls. YUMC generated a new 4-week low and also generated a minor sell signal, having closed below the most recent weekly closing low at 46.83 (closed on Friday at 46.69). The stock closed in the lower half of the week's trading range, suggesting further downside below last week's low at 46.00 is expected to be seen this week. The next intraweek support is found at 45.34 and then a bit stronger at 44.04. The 200-day MA is currently at 46.67 and with the stock closing on Friday at 46.69, if the bulls want to have the short-term edge, they need to generate a red close on Monday. Intraweek resistance is found between 48.18 and 48.36, which if broken would give a new edge to the bulls. Like with TCEHY, the original reasons to short the stock have gone away, meaning that if is gets anywhere near the original entry point at 44.37, consideration to covering the shorts should be given. The stock reports earnings on Tuesday, before the opening bell. ZLAB generated a negative reversal week, having made a new 7-week high but then closing red and near the low of the week, suggesting further downside below last week's low at 35.55 will be seen this week. On the other side of the coin, the stock made the week's low on Friday and then turned around to close on the high of the day, suggesting further upside above Friday's high at 37.01 will be seen on Monday. Daily close resistance is found at 38.35, and if the bulls can close above that level any day this week, it is likely that the downside correction is over. A daily close above 40.51 would give back short-term control to the bulls. A daily close below 32.73 would do the opposite. There has been no new news on the company recently. It is important to note that on the monthly closing chart, the stock broke pivotal resistance at 36.14 (closed on Thursday at 37.80) and closed in the upper half of the month's trading range, suggesting that in August, the stock is likely to go above last month's high at 41.20. The stock reports earnings on Thursday morning before the bell.
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1) ZLAB - Averaged long at 65.50 (7 mentions). No stop loss at present. Stock closed on Friday at 36.82. 2) VWDRY - Averaged long at 8.68 (4 mentions). No stop loss at present. Stock closed on Friday at 6.07. 3) LXRX - Averaged long at 1.513 (7 mentions). No stop loss at present. Stock closed on Friday at 1.07. 4) BCTX - Averaged long at 7.825 (2 mentions). Stock closed on Friday at .744. 5) YUMC - Shorted at 44.37. No stop loss at present. Stock closed on Friday at 46.69. 6) TCEHY - Shorted at 66.15. Stop loss is at 66.37. Stock closed on Friday at 67.91.
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