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Issue #923 
Aug 10, 2025 , | Newsletter
The newsletter with chart analysis for stocks and stock indexes |
Stock Indexes Analysis/Evaluation
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| Correction has started? It was not confirmed this past week and doubts have appeared!
DOW Friday Closing Price - 44175 The indexes turned around this week and negated the selling barrage that was seen the previous week. The tech sector was the driving force as AI continues to dominate the market and buying in that sector is found on each-and-every dip, no matter how small a drop in value is seen and how overbought that sector remains. AAPL was also a driving force as it made an announcement that it was investing $600 million into new facilities in the U.S. In addition, it (and AMZN) also reported better than expected earnings, which also helped the bulls. All of this helped the Tech sector (primarily) as the NASDAQ led the market to the upside, making a new intraweek, daily and weekly close all-time highs. The other indexes generated an inside week, which was not as indicative as the action in the NASDAQ was. The SPX did make a new all-time daily and weekly closing high but it was only by 1 point (6389 vs the previous at 6388), meaning the action was not as indicative as the action in the NAZ was. Nonetheless, "all" indexes closed on (or near) the highs of the week, suggesting further upside above last week's highs (DOW at 44498, SPX at 6395, NASDAQ at 23619 and RUT at 2243) will be seen this week. The 2 driving indexes (SPX and NASDAQ)remain in an overbought condition but in the DOW and RUT, the overbought condition has been ameliorated. Overall though, the indexes have seen a rally of great consequence, with the DOW being the laggard but still having rallied 20% from the low seen in April compared to the NASDAQ, which has led the way having moved up 30%. With the future still being uncertain, such a rally needs/requires a correction in order for it to continue much longer. With August normally being a seasonal down month and all the big and catalytic earnings reports now out, it would not be surprising if the indexes don't turn around this week and go down (opposite of what happened last week and mimicking what happened the previous week when "key reversals" occurred). This week the inflation reports (CPI and PPI) come out on Tuesday and Wednesday, and Retail Sales and Consumer Sentiment on Thursday. All of these reports, with the exception of Consumer Sentiment, are expected to be less than last month. This means that inflation should be lower and if that does not happen, it will generate new selling interest. Retail Sales is also expected to be a lower number and if that happens or it is even lower than expected (5%), it should also be a negative. As far as the charts are concerned, the DOW made a new 6-month high 3 weeks ago at 45016, and if it goes above last week's high at 44498 this week but not above that previous high, and then goes below this week's low next week, the chart will be set for a correction. In the SPX, the all-time high at 6427 was made the previous week, and if last week's high at 6395 is broken and no new all-time high is made, and then followed by a lower low than this week's low the following week, the needed/required retest of the high will have been made and selling will once again appear. The NASDAQ has no levels at this time, other than the previous week's low at 22673, that would be indicative if broken. On another note, if the indexes do go above last week's high and "then" go below last week's lows (DOW at 43724, SPX at 6271, NASDAQ at 22973), it would effectively negate this past week's rally and would bring in selling interest. Having said all of the above, the reality is that right now the traders are ignoring every "normal and established in the past" chart guidelines and are trading on emotions as well as on the fact that this presidency is unique and impossible to predict what the outcome of the president's decisions/actions will be. As such, it is very difficult to go against the momentum-to-the-upside that is being seen. One thing to look at right now for clues is the VIX (volatility) Index. It closed on Friday at 15.15. Intraweek support is found at 14.58 and pivotal at 12.77. Pivotal intraweek resistance is at 21.90. If volatility drops, the bulls will continue to control the market. If volatility rises, the bears will be "stepping up to the plate". HSI Index generated a positive reversal week, having made a new 3-week low and then closing green and in the upper half of the week' trading range, suggesting further upside above last week's high at 25121 will be seen this week. Nothing of consequence occurred on the weekly closing chart but on the daily closing high, the index negated the break of the 43-month daily closing high at 24771 (which occurred the previous week) with closes above that level the last 4 days of the week. If the index goes above last week's high, it will either mean that the recent high at 25735 is going to be tested or that the uptrend is resuming. The latter is the most probable as the 43-month high was not anywhere near any established intramonth resistance (the next one is at 26782). Nonetheless, if the bulls fail to break above the 25121 level and go below any of the following week's low, a correction would likely begin with the 23000 level as the objective. There is nothing clear right now but resumption of the uptrend does have the edge.
GOLD(Dec 2025 chart) made a new intraweek and weekly closing all-time highs after Trump announced reciprocal tariffs on 100-ounce gold bars. Gold got up to $3534 (above the previous all-time high at $3509) and closed very slightly above the middle of the week's trading range, suggesting a slightly higher probability of going above last week's high at $3534 than below last week's low at $3445 (closed at $3491). Having said that and on the daily closing chart, Gold failed to make a new all-time high daily close at the previous one is at $3501 and it closed below it on Friday. As such, the bulls still need to do more this week to confirm resumption of the uptrend. A daily close below $3452 would give the bears a slight short-term edge. OIL generated a new 2-month intraweek low and did give a sell and failure (against the bulls) signal on the weekly closing chart, having closed below the 2-months weekly close support at 64.07 (closed at 63.89). Oil closed near the low of the week, suggesting further downside below last week's low at 62.89 will be seen this week. The next level of intraweek support (minor) is at 59.26 and major and pivotal at 55.12. On the daily closing chart, there are 3 levels of support to watch at 63.26 and 60.79 and at 59.58 (all minor) from which a small bounce could occur. Daily close resistance (also minor) is found at 64.68 and a bit more short-term indicative at 65.16. Momentum and fundamentals (more supply than demand) are also in favor of the bears.
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Stock Analysis/Evaluation
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CHART Outlooks
With a few exceptions, short position mentions have been losers, given that the fundamentals in the AI industry (Tech) and momentum have been relentless and have driven the rest of the market up. At this time, short positions are still the "way to go" but then only when indicative sell signals are given. As this time there are no stocks that fit that guideline.
Having said that, there are still sectors and industries that have not participated in the rally. If those stocks do generate a buy signal under these circumstances, they can be bought and the risk/reward ratios are good and the probability ratings are good as well. Here are a couple I found that fit that description.
VKTX Friday Closing Price - 37.04
VKTX is a BioPharma company that generated a breakout this week (made a new 8-month intraweek, daily and weekly closing high). The company was helped fundamentally when one of Eli Lilly's phase 3 drugs that they have been working on, suffered a setback that supported new buying of the drugs that VKTX is selling. In addition to the new 8-month high made, the stock closed above the 200-day MA (currently at 35.84) that has been unbroken and untested since November 24th 2024. The important chart thing that is in place is that there is absolutely no resistance above until the 50.90 level (on a weekly closing basis) is reached. With the stock having the 200-day MA now below it, and the daily and weekly close breakout levels being between 34.07 and 34.94. the risk is clear and dependable and the reward is exceptional and also dependable.
VKTX is likely to at least retest the MA line at 35.84 this coming week, if not go all the way down to the weekly close breakout at 34.07 (unlikely to happen). As such, purchasing the stock around the 35.84 level and having a stop loss at 33.94 (on a daily closing basis) and an objective of 50.90, the risk/reward ratio is 7-1. My probability rating is a 4 (on a scale of 1-5 with 5 being the highest).
OUST Friday Closing Price - 25.80
OUST is a company that provides digital sensors for automobiles and is heavily involved in the AI industry for its product. The stock made an all-time high at 265.95 in December 2020 and the proceeded to get into a major downtrend that reached an all-time low of 9.23 in April 2023. For the past 27-months it has proceeded to build a bottom with a high of 19.20 and 16.88 being built during that period of time. The low has also been tested on several occasions, meaning that a bottom is now in place and a recovery rally to the big drop seen, has begun In June, the stock broke out, having made a 32-month high at 26.07 and for the past 2 months the highs have been 31.77 and 32.95, meaning the breakout has been confirmed.
Just 8 weeks ago, the stock got up to the 200-week MA (currently at 20.59) and failed to close above it for the next 2 weeks but 5 weeks ago, the stock broke above the line, then retested the line the following week, and this past week, proceeded to make a new 27-month intraweek high, suggesting that the uptrend is likely to continue. Nonetheless, last week OUST closed in the lower half of the week's trading range, suggesting further downside below last week's low at 22.49 will be seen this week. This does suggest that a retest of the first retest of the MA, as well as of the MA itself, is in the works. If that does happen and the retest is successful, the bulls will get strong ammunition for further upside.
What is fascinating about this trade is that the monthly chart (and the way the fall from the $295 occurred), does suggest that the stock is likely to test the intramonth high made in April 2023 at 75.00 before the end of the year (3-4 months), which would make the risk/reward ratio on this trade extra attractive. With AI being behind this stock, this is also a high probability trade.
As far as the desired entry point, it is anywhere below last week's low at 22.49. As far as the stop loss point, that will be below the weekly close breakout level at 20.70 (20.60 based on a weekly close). There is short-term indicative daily close support at 21.98 and at 21.40, neither of which should be broken. Objective is 75.00, meaning the risk is approximately $189 and the profit potential being approximately $4750, meaning a risk/reward ratio of 24-1. My probability rating is 3.75 (on a scale of 1-5 with 5 being the highest).
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Updates
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Closed Trades, Open Positions and Stop Loss Changes |
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BCTX generated a new all-time intraweek and weekly closing low but this time it closed in the upper half of the week's trading range, suggesting further upside above last week's high at .78 will be seen. The reason this week for yet another drop in price was the announcement that the company plans to do a reverse split of 12-1 on August 25th, in order to comply with the requirements of the NASDAQ to keep on being listed there. The reverse split will mean that the shares will increase in price by 12 but shares owned will become 1/12th of the amount (.70 cents per share will become 8.40 per share but 1200 shares will become 100 shares). Generally speaking, when a reverse split occurs, the shares tend to lose value (per share), simply because of the split. Otherwise, there was no new news on the company. LXRX generated a green week but then closed near the low of the week, suggesting further downside below last week's low at 1.03 will be seen this week. Overall, it was not an indicative week, other than buying interest was once again seen around the 1.00 level, which is where important and indicative support on both the daily and weekly closing charts is found. A retest of that level has been expected and is important to both the bulls and the bears, given that holding that area will likely mean a rally to 2..00 or a drop down to .70 (depending on whether the support holds up or not) will be seen over the next few weeks. For what is to happen "this week", the 1.05 and 1.15 levels (on a daily closing basis) will likely mean that the bulls or bears will win the week, as far as whether on Friday the stock is to close at the 1.00 level, or the weekly close at 1.07 that happened the previous week, will become the retest of support. Probabilities do favor the bulls overall but for this week, it is a coin flip (as to the week's action. TNC generated a negative reversal week. having made a new 4-week high but then going 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 78.63 will be seen. The reason for the negative week was the earnings report that came in less than expected and was a negative fundamental to the stock. Having said that, the bears failed to confirm the negative news on the weekly closing chart, given that the stock did not break the most recent low weekly close at 79.98 (closed on Friday at 80.30). On the other side of the coin and also helping the bear side, the 200-week MA, currently at 80.50. and the 200-day MA, currently at 80.36, were broken, so the outlook for the week does favor the bears but it is not yet a "done deal". In looking at the daily closing chart, a daily close any day this week below 79.52, would give the bears strong ammunition, while a close any day this week above 83.61 would do the opposite. The 200-day MA is also something to watch this week as a confirmed daily close above that line would give the bulls a bit of a short-term edge. VWDRY generated a very uneventful red week (generated a trading range of only $.15 cents) but did close on the low of the week, suggesting further downside below last week's low at 5.96 will be seen this week. It does need to be mentioned that the 5.94 level on the weekly closing chart (5.77 on the daily closing chart) are short-term pivotal levels of support that were expected to be tested but not broken. With the stock closing at 5.99 on Friday, this week could be pivotal for the mid-term outlook. Any daily close above 6.19 or below 5.77 would be short-term indicative (in favor of the bulls or bears, depending on which gets broken). Probabilities do favor the bulls. ZLAB reported earnings this week and they disappointed the traders, causing the stock to generate a 2nd red week in a row and closing in the lower half of the week's trading range, suggesting further downside below last week's low at 33.17 will be seen this week. On a positive note, the stock still closed above the 200-week MA, currently at 33.89 (stock closed on Friday at 34.96), suggesting that overall the bulls still maintain the edge. Intraweek support is found at 32.31 that if broken, would suggest the stock would drop down to the 200-day MA, which is currently at 31.60. The first support should hold, if and when the bulls do maintain the edge. The latter support would weaken the chart and likely put the stock into a sideways trading range between $30 and $40 for the next month or two. There are no clear probabilities as to which will be the result this week but if the bulls want to keep the stock alive for further upside, the 32.31 level should not be broken. To the upside and on a daily closing basis, short-term pivotal resistance is found at 37.58, which if broken would negate the weakness seen this week.
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1) ZLAB - Averaged long at 65.50 (7 mentions). No stop loss at present. Stock closed on Friday at 34.96. 2) VWDRY - Averaged long at 8.68 (4 mentions). No stop loss at present. Stock closed on Friday at 5.99. 3) LXRX - Averaged long at 1.513 (7 mentions). No stop loss at present. Stock closed on Friday at 1.08. 4) BCTX - Averaged long at 7.825 (2 mentions). Stock closed on Friday at .715. 5) TCN - Shorted at 82,36 and at 83.34. Averaged short at 82.85 (2 mentions). No stop loss at present. Stock closed on Friday at 80.30. 6) YUMC - Covered shorts at 44.13. Shorted at 44.37. Profit on the trade of $24 per 100 shares. 7) TCEHY - Covered short at 71.70. Shorted at 66.15. Loss on the trade of $555 per 100 shares. 8) AAPL - Shorted at 219.99 and at 222.80. Covered shorts at 225.73. Loss on the trade of $883 per 100 shares (2 mentions).
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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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