Weekly market technical analysis comments


The DJIA continued its gravity-defying (or should we say, “tariff-defying”) climb, the S&P 500 followed suit, and so did the rest of the US stock market, even as the ten-year interest rate ticked back to 2.994% and looks ready to break out to the upside, which has caused swoons in the market the last couple of times it occurred. The Fed will be raising short-term rates in less than two weeks another ¼%, and the yield curve continues to flatten.

The NASDAQ bounced off its 12-week moving average line and did not fall below that line of support, which was our fear going into this week. So, the trend remains positive for now, but just barely. The NASDAQ composite index is once again above 8000, the DJIA is over 26000, and the S&P 500 is back above 2900, all important psychological benchmarks. Should they close below those levels again, it could be a different story.
The VIX (volatility index) failed in its bid to push above the narrow range to which it had been confined for the past several weeks and finished just above 12 for the week. There is no trend visible at this time. As long as this index is below 13, stocks can rise.
Financial stocks were flat, but bank stocks were decidedly weak, and they appear to be entering a bearish phase in the intermediate term. Long term bonds were sharply lower for the third straight week and remain in a downtrend.

Biotech ETF XBI was slightly lower again and does not look interesting right now.

European large cap stocks gave a much-improved performance, bouncing about 2% on average after a dismal showing the previous week; they may have bottomed out for now, but there is no buy signal on them at this juncture.

EEM, the emerging market ETF looks very weak despite a positive week, but EMB, the emerging market bond fund, was sharply higher and will issue a buy signal next week. EWX, the S&P emerging markets small cap ETF, flopped last week after an encouraging buy signal the previous week; it remains in a strong downtrend.

Gold is signaling an intermediate-term buy at 1200, but it has many obstacles to overcome to get back to a bull market. The U.S. Dollar was looks to be headed lower, perhaps back to the 93-94 area, having failed to hold 95. The trend was slightly positive last week but has flattened out.

The Euro also gave us an intermediate-term buy signal at 1.17.

Crude oil was slightly higher but remained in an increasingly narrowing range between 64.80 and 72.81.

Bitcoin closed the week at 6525 and remained in a narrow trading range with no trend.

Apple’s longer-term uptrend remains intact, but it may pull back short-term. Google remained in bear market territory after a sharp selloff last week. There is strong support at 1118 should it get down that far. Facebook continued to slide and looks like it is headed to the 150-155 area. Netflix pushed back up to its midline inflection point; it looks like it will try to rally next week. Amazon was slightly higher but may be rolling over.

There were buy signals in different sectors of the market than we had been focused on in recent times. We held onto our two most profitable tech positions, NVDA and OLED, and we initiated positions is Tiffany, PVH (clothing brands), Ralph Lauren, Lear Corp, Diamondback Energy, and Qorvo, all of which are hedged by call options. Some of the stocks we sold last week came back, but we did not re-enter the positions because we did not get new buy signals. We are approximately 57% invested.
For the record, we are still up 21.62% for the year. The S&P 500 is up 8.60%. The NASDAQ composite is up 16.04%.
These are the closed trades.

Entry Date Long or Short Symbol Entry Price Sale Date Exit Price % gain/ loss $ gain/ loss
7-Sep S TIF Oct 5 124 call -3.32 12-Sep -4.46 -34.34% -114.00
10-Sep L NX 20 puts 2 1.2 13-Sep 1.35 12.50% 30.00
10-Sep S RL Oct 5 132 call -3.5 13-Sep -5.44 -55.43% -194.00
11-Sep L MJ 36.36 13-Sep 35.31 -2.89% -105.00
11-Sep S MJ Oct 37 -1.49 13-Sep -1.41 5.37% 8.00

Entry Date Long or Short Symbol Entry Price Current Price Open profit/ loss % Open profit/ loss $
29-Jun L OLED 100 shares 85.65 119.90 39.00% 3425.00
20-Aug S OLED Dec 100 call -22.31 -24.70 -10.71% -239.00
20-Aug L NVDA 100 241.16 276.21 14.53% 3505.00
21-Aug L TJX Sep 105 puts 2 2.15 0.13 -94.19% -405.00
23-Aug S NVDA Dec 255 call -25.65 -32.80 -27.88% -715.00
23-Aug L FLY Sep 15 puts 5 0.55 0.45 -18.18% -50.00
27-Aug L DLPH Sep 40 calls 3 0.45 0.01 -99.99% -135.00
7-Sep L TIF 124.08 128.69 3.72% 461.00
10-Sep L RL 131.73 131.74 0.01% 1.00
12-Sep S TIF Oct 19 125 call -4.58 -5.85 -27.73% -127.00
12-Sep L LEA 160.88 161.71 0.52% 83.00
12-Sep S LEA Oct 165 call -3.81 -3.80 0.26% 1.00
12-Sep L FANG 118.85 121.73 2.42% 288.00
12-Sep S FANG Oct 120 call -4.43 -5.50 -24.15% -107.00
13-Sep S RL Oct 26 134 call -5.66 -3.75 33.75% 191.00
13-Sep L QRVO 74.83 75.74 1.22% 91.00
13-Sep S QRVO Oct 19 75 call -2.96 -3.25 -9.80% -29.00
14-Sep L PVH 140.1 139.54 -0.40% -56.00
14-Sep S PVH Oct 140 call -4.37 -4.10 6.18% 27.00
Partially closed positions, if any, are marked by (*), and the prices shown are not current.
The model portfolio track record, containing all trades, gains and losses discussed in this newsletter, plus the newsletter archives, are posted at the website:
Your username is your email address, and if you haven’t changed it, your password is skJ3V!s2x. A screenshot of the actual chart of any instrument discussed herein showing the actual buy and sell signals, is available upon request.

The foregoing is solely the opinion of the author and is not an offer to buy or sell securities.

All investments involve risk, and the past performance of a security, industry, sector, market, financial product, trading strategy, or individual’s trading does not guarantee future results or returns. Investors are fully responsible for any investment decisions they make. Such decisions should be based solely on an evaluation of their financial circumstances, investment objectives, risk tolerance, and liquidity needs.

Any reference to a specific security should not be construed as a recommendation to buy or sell that security. Specific securities are mentioned for informational purposes only.

The returns referenced herein cannot and should not be extrapolated to annualized percentages. That is because 1) the period over which these gains were generated is too short to provide a reliable indication of annual gains, and 2) there are no other samples of the general performance of this strategy with which to compare this period, and the sample size is not statistically significant, and 3) these returns are not adjusted for transaction costs or slippage. Past performance is no guarantee of future results. We do not claim our strategy will generate gains at the same rate over the long term.
Copyright © 2018 by Benjamin Blakeman. All rights reserved.

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