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Issue #916 
Jun 15, 2025 , | Newsletter
The newsletter with chart analysis for stocks and stock indexes |
Stock Indexes Analysis/Evaluation
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| Israel and Iran war may have given the bears the edge for a correction to begin.
DOW Friday Closing Price - 42197 Across the board, all indexes generated a negative reversal week, having made a multi-week high and then closing red and near (or on) the low of the week, suggesting further downside below last week's low will be seen this week. In the DOW below 42081, in the SPX below 5963, in the NASDAQ below 21591, and the RUT below 2095. The main reason for the negative reversal was the escalation of the war in the middle east, which occurred on Friday with Israel bombing Iran and Iran responding in kind. Such an escalation is likely to continue generating issues on a short term basis that affect the market, but that is not something that the bears can depend on for mid-to-long term effect. On the other side of the coin, the inflation report (CPI) came in slightly lower than expected, meaning that the overall unfavorable picture of the tariff war has not yet created any longer-term negatives on that front. Having said all of the above, the indexes generated a negative reversal day on Wednesday (just after the inflation report came out) and that was a sign that the momentum to the upside has begun to wane. The indexes are all into overbought territory and some correction was/is likely to occur. Nonetheless, there is one report this week that could still generate new ammunition for the bulls. On Wednesday at 2:00pm, the Fed will announce their Fed Rate decision for June. They are expected to keep interest rates the same, but there is strong pressure from Trump for them to begin cutting interest rates and due to inflation not rising, there is a decent possibility that it could happen this week. If it does, the charts will be put aside and the traders will evaluate the potential results of such action, and new purchasing interest could be the end result. If that does not happen, the charts will take over and barring any surprise announcements from Trump, the probabilities will favor the bears. Here is the chart information. In the DOW, the downside objective for this week is likely to be 41647. There is pivotal intraweek support at 41354, which if broken would bring in strong selling interest. To the upside, there in intraweek resistance at 42842 and pivotal at 43115. In the SPX, the downside objective for this week is 5923 with a decent possibility of getting down as low as 5857. Pivotal intraweek support is found at 5767. To the upside, daily close resistance is now found at 6001 and pivotal intraweek resistance is found at 6059. In the NASDAQ, the downside objective for the week is 20974 and pivotal intraweek support is found at 20538. To the upside, there is intraweek resistance at 21935 and pivotal at 22222. The NASDAQ continues to be the key index, given that the Tech Industry is what is driving the market and that will not change. As such, whatever the index breaks (support or resistance) is what will be indicative. The bears should be in charge at the beginning of the week but Wednesday is the day that traders will be keying on. If the Fed does nothing (as anticipated), the indexes should end up the week with another red weekly close. HSI Index generated a negative reversal week, having made a new 12-week intraweek high and then closing red and near the low of the week, suggesting further downside below last week's low at 23773 will be seen this week. Chinese market analysts suggest that this rally has ended, saying that the fundamental picture is no longer supporting further upside. Having said that, no support levels were broken, meaning that the charts do not yet support that outlook, other than the negative reversal week that could be indicative. On the other side of the coin and in looking at the monthly closing chart, the index finds itself at a resistance level between 23800 and 24000 that goes all the way back to 2010 and that without additional positive information, has a strong probability of holding up. As such, the probabilities do suggest that this rally is likely over. The monthly chart does suggest that a drop back to the 20000 level is now likely to be seen, over the summer. On a shorter-term basis and for this week, the levels that should be seen on an intraweek basis are 23917 and either 23198 or even 23059. With the index closing on Friday at 23892, it does suggest the week will be all red. A confirmed daily close below 23792, would be confirmation of that scenario. A daily close above 24396 would negate this outlook.
GOLD(Aug 2025 chart) generated a new all-time daily and weekly closing high and closed near the high of the week, suggesting further upside above last week's high at $3468 will be seen this week. The bulls have not yet generated a new intraweek high above $3509, so the closing highs were not totally confirmed. Evidently, the Fed rate decision on Wednesday will be an integral part in whether the bulls can totally resume the uptrend (or not). Having said that, the war between Israel and Iran (in addition to the weaker dollar) does give new reasons to purchase Gold, even at these prices. Chart-wise, a daily close below $3425/$3422 will weaken the chart as that is the previous all-time high double top. Probabilities favor the bulls. OIL generated a new 20-week intraweek and weekly closing high and closed in the upper half of the week's trading range, suggesting further upside above last week's high at 77.58 will be seen this week. Oil moved up 17% in value but did most of that move on Friday, due to the bombing by Israel of Iran. Iran is a key supplier of crude oil and any possibility of disruption on that front, would support higher Oil prices. Having said that though, Oil is near a level of intraweek resistance that begins at 78.46 and is pivotal at 80.77, which would require tangible proof of Oil disruption of consequence to break. Oil did come down $5 from the high made when the bombing was announced, meaning that a good portion of the rally was probably due to short-covering. Intraweek resistance is found between 65.22 and 66.61, which has a fair degree of possibility of being seen this week, if and when the bombing does not cause any further disruptions. This does suggest that for now and until some resolution occurs, Oil could trade within a $15 trading range between $65 and $80.
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Stock Analysis/Evaluation
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CHART Outlooks
Under the present scenario, the only thing that makes any sense to do is to short positions. Nonetheless, shorting anything right now is a gamble (not a probability trade), given the uncertainty that Trump's words and actions regarding the future of Fed Chief Powell staying on as head of the Federal Reserve provide. Having said that and not as dependent on Trump, is the Chinese market and it is there where this week's short mentions will be.
YUMC Friday Closing Price - 43.57
YUMC is a fast-food chain in China that handles KFC and Pizza Hut. The stock made a new 29-week low 7 weeks ago and since then has been moving sideways while the Chinese stock market rallied. 20 days ago, the stock broke the 200-day MA (currently at 45.55) and has proceeded to test the line 3 times successfully. The stock closed on the low of the week on Friday and further downside below last week's low at 43.42 is expected to be seen this week. With the Chinese index due to head lower now, this stock could be one of the leaders to the downside.
In looking at the intraweek chart, YUMC has a clear downside objective of 33.55, which is where the next established support is at. With the stock having gotten up to 45.59 this past week and that being also where the 200-day MA is currently at, it does suggest that breaking of that level would negate the negative outlook, meaning it is a perfect place to put a dependable stop loss at.
Sales of YUMC between 43.55 and 43.71, having an objective of 33.55 and a stop loss at 45.75, offers a 5-1 risk/reward ratio. My rating on the trade is a 3.75 (on a scale of 1-5 with 5 being the highest).
TCEHY Friday Closing Price - 64.81
TCEHY is a massive Chinese conglomerate with interests in gaming, social media, and more. The stock made a new 32-month high 4 months ago but then generated a 27% correction. Five (5) weeks ago and on the weekly chart, that high was tested successfully and this past week and on the daily chart, the stock now shows 2 successful tests of that high. Having said that, no sell signal has been generated anywhere yet (like the Chinese index). Nonetheless, if the Chinese index is to head lower, the probabilities favor the stock heading lower as well.
TCEHY shows the 200-day MA being currently at 57.12 and the stock has pivotal weekly close support at 57.40. At this time it is unlikely that support will break but if the retests of the recent multi-year high are confirmed, a retest of those 2 supports become a high probability. Confirmation of the successful retests will occur with a daily and weekly close below 62.78.
The most recent successful intraweek retest is at 66.23 and if that is broken, the chart outlook will change, meaning a stop loss can be placed at 66.33, which is dependable and offers a good risk/reward ratio on the trade. Desired entry point will be at Friday's close at 64.81 and with an objective of 57.40, the trade offers a 7-1 risk/reward ratio. My rating on the trade is 3.25 (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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AAPL generated an uneventful week with no breaks of support or resistance. Nonetheless, the stock closed on the low of the week, suggesting further downside below last week's low at 195.70 will be seen this week. On a daily closing basis, there is short-term pivotal support at 195.27, which if broken, the downside target would be at least a re-test of the weekly close support at 188.38. Having said that, the 200-week MA is currently at 180.66 and that level would become a magnet. To the upside, a daily close above 203.92 would change the short-term outlook. BCTX generated a new 11-day low and a close on the low of the week, suggesting further downside below last week's low at 3.12 will be seen this week. There was no new news to support the one-day drop of 12%, which occurred all on Friday. The date of the drop coincides with the missile attack on Iran. but I could not find why such an event would generate a drop in the stock. On a chart basis, no damage was done as neither of the two weekly closing lows at 2.94 and at 3.07 were broken, suggesting this could turn out to be the 2nd successful retest of the all-time low. Intraweek support is found at 3.00 and at 2.81 and if neither of those are broken this week, probabilities would favor a recovery rally with 3.56 as the short-term target. A break of that level would suggest 4.50 would be visited. LXRX generated a failure signal, having closed on Friday below the previous high weekly close at .70 that was broken to the upside last week. The stock closed on the low of the week, suggesting further downside below .67 will be seen this week. Having said all of the above, the recent uptrend continues and unless a weekly close below .535 occurs, the action seen will strongly suggest a bottom building formation. Already, the stock shows 2 previous successful retests of the all-time low. The previous week's close at .77 is the new weekly close resistance. MMM generated a failure signal against the bulls, having closed below a previous low weekly close of short-term indicative at 144.98 (stock closed at 142.32). Another short-term sell signal was generated and without any support below until the 200-day MA (currently at 139.00) is reached, that is the objective for this week. On the weekly closing chart though, the next support level is at 137.30 and based on that chart, that is the level the bears will shoot for now. To the upside and on a daily closing basis, the 147.18 level is now short-term pivotal resistance. TXN generated a new 15-week intraweek, daily and weekly closing highs but this time, the stock closed near the low of the week, suggesting further downside below last week's low at 193.47 will be seen this week. On an intraweek basis, the stock did get up as high as 203.35 but the pivotal intraweek resistance at 205.75 was not broken. If the stock does go below last week's low, last week's high will become the 2nd successful retest of the all-time high, meaning new selling interest will occur. Such an event would suggest that the next intraweek support level of consequence at 180.07 would become a target/magnet. The 200-day MA is currently at 189.51 and a bounce from that level is likely to be seen. Last week's high is now pivotal resistance. WTW generated a sell signal on the weekly closing chart, having closed below the previous low weekly close support at 302.19 (closed at 296.33). The stock has been on a downtrend since March and further downside is expected to be seen. On Thursday, the stock generated a green daily close at 301.11 and the previous and pivotal daily close support at 301.01 was tested successfully, confirming more downtrend is expected to be seen. The next weekly close support area is between 288.35 and 290.04 and that is now the target for this week. A daily close above 301.11 would negate this outlook. VWDRY generated a new 6-month intraweek and weekly closing high and closed near the high of the week, suggesting further upside above last week's high at 5.69 will be seen this week. The 200-week MA is currently at 5.33 and given that a new multi-month high has been made, that line is now indicative support. The objective for the next week or two is 5.94 as that was an important low weekly close. A close above that level would negate the downtrend. ZLAB generated a new 30-month intraweek and weekly closing high and closed in the upper half of the week's trading range, suggesting further upside above last week's high at 44.34 will be seen this week. The stock also broke and closed above the 200-week MA, currently at 37.52, making that level weekly close support now. On a daily closing basis, support is now found at 38.32. To the upside, there is no intraweek resistance until 45.69 (minor) and then at 49.81 (decent and short-term pivotal) are reached. With the Chinese index likely to be heading lower now, it will be difficult for the bulls to accomplish much more, unless some new positive news comes out. By the same token, this stock has not been as dependent on the index as other Chinese stocks are. As such, I can see the stock trading between $38 and $46 for the next few weeks.
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1) ZLAB - Averaged long at 65.50 (7 mentions). No stop loss at present. Stock closed on Friday at 41.00. 2) VWDRY - Averaged long at 8.68 (4 mentions). No stop loss at present. Stock closed on Friday at 5.58. 3) LXRX - Averaged long at 1.513 (7 mentions). No stop loss at present. Stock closed on Friday at .67. 4) BCTX - Averaged long at 7.825 (2 mentions). Stock closed on Friday at 3.12. 5) TXN - Shorted at 200.28. Averaged short at 194.95 (2 mentions). Stop loss now at 203.45. Stock closed on Friday at 195.00. 6) AAPL - Averaged short at 205.62 (2 mentions) Stop loss is at 214.66. Stock closed on Friday at 196.45. 7) MMM - Shorted at 151.23. Stop loss at 156.35. Stock closed on Friday at 142.32. 8) WTW - Shorted at 301.01. Stop loss at 301.32 (on a daily closing basis). Stock closed on Friday at 296.33
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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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