Tickers discussed: SPY / QQQ / IWM / Commodities / VIX / $TRAN/ GBTC / Strategy update
The Weekend Profit Navigator provides a big picture stock market analysis for the week just past with a look ahead. Key levels and trading locations for the indexes are provided, along with trading plans and timely commentary to keep you on the right side of the trade.
Earnings
Although we are on the downside of “earnings mountain”, still plenty of names worthy of garnering our attention.
Market Factoids
While no one was looking, China has shrewdly and quietly become supplier to the world and thus wields tremendous influence across the globe.
Growth and Momentum re-emerge as leaders post-election
CNN Fear / Greed over time bouncing but towards the middle of the range
Persistent Dark Clouds
A couple of slides here. Number of IPO’s that lose money continues to grow shown in slide 1. In slide 2 the graph shows the number of companies that are technically bankrupt ( zombies ) continues to grow.
The $USD crashes
The US Dollar was off nearly 2% this past week as it presses toward 2 year lows. The move lower in the Dollar is supportive of higher equity, commodity, and precious metal prices.
$EURUSD Tries to breakout
A breakout by the Euro / US Dollar pair above $1.19 would give a lot of juice to the precious metals. Even if you are not a big currency trader this is an important pair to watch if you are interested in Gold / Silver / Miners / or commodities in general.
Bitcoin breaks out
Bitcoin “feelin it” with a big breakout on the weekly chart. Technically not a lot in the way of this to make a run at the 2017 high. Stay long against 16. 
Oscillators jump to neutral
Last week, $NAMO and $NYMO were at the bottom of the range and were teetering on oversold conditions. The post-election moonshot in equities have lifted the oscillators to the mid-points of their typical ranges. Nothing to see at this time. I will let you know when they get to extremes or you can track them yourselves.
$TRAN – Transports hold at Key Support and bounce
Last week transports were flashing a yellow flag as a key support level was tested. The key 11,000 level held and price put in a nice bounce. In the process, PPO never executed a bear cross and thus is a positive. As long as $TRAN holds 11,000 the chart can stay constructive even though the steep trend line has been violated. I think its still a good idea to alarm 11,000 in your platform. If you’re bullish, you never want that to trigger.
The $VIX Collapses
With the election in the rear-view mirror and a substantial relief rally underway, the $VIX completely collapsed from the low 40’s to $25. What may have more implications is the fact that price closed below the rising trend line off the February lows. Traders can key off of $24 on the low side and $27.50 overhead as important levels going forward. Closes below $24 will open the door for a move to $20 key support and would be bullish equities. A break back above $27.5 and the market may be sniffing out problems ahead.
All SPDR Sectors advanced for the week
Traders flocked back to tech / growth this past week and left value in the dust. Also getting a boost was healthcare as the risk of implementing a single payer system now seems remote. XLB benefitted from a falling Dollar which lifted resources / basic materials.
Looking at the Indexes
SPY Weekly
Price was up over 7% this past week and closed at an all-time weekly closing high. With a little imagination the last 3 months of trading almost looks like a bull flag consolidation of the advance off the lows. If the weekly chart can maintain momentum and breakout, it could mark the beginning of a fresh bull leg and propel price to the 4000 range.
SPY Daily
Price blasted off the near touch of the September lows as a post-election risk-on rally dominated the week. If price can jump the $355 area to a new high, traders will have a great line to shoot against for a potential end-of-year rally. To my eye, any pull back to $342 / $340 area should be bought with a stop just below as the prior trading range should act as support now.
QQQ Weekly
Price has been in a $35 wide trading range for the better part of 3 months. A break higher from the box targets $330. THat said, persistent bearish divergences still exist. Price needs to drive higher and burn through those divergences. If there were to be a pull back, anything north of $260 keeps the chart bullish.
QQQ Daily
Price cleared the downtrend resistance line off the old highs as RSI broke above 50 and PPO emerged above the zero line. All positive developments. re-entered the prior trading range but has held a trend line off the February high. A break below $260 open up multiple downside scenarios. Don’t discount the possibility of a stop clearing run followed by a rip higher.
IWM Weekly
Simply put, price needs to take out 167.50 resistance that has stood in place for 2 years once and for all. Anything short of that is a fail.
IWM Daily
Price had a strong advance this week, but notice the bearish divergences on both RSI and PPO. Price at relative highs but with RSI and PPO lower. THat condition is not a sell signal, but hard to see price waltzing through 2 year resistance at $167.50 on declining momentum. Price needs a surge to burn through the divergences and break out. If price can break above $167.50 traders can reset everything and be long against that level for a push to the low 170’s to challenge the ATH
Pulling it all together
The indexes had a great week not only in terms of gains, but also on nice breadth expansion. THis bodes well for near term prospects. All the indexes are on the verge of significant breakouts to new highs. If they are able to accomplish that, they will have left behind some significant chop zones where we’ve been consolidating for a bout 3 months. While I am under no illusions of grandeur, Breakouts would set the stage for a rally to year’s end. Seasonality is supportive of such a scenario. Let’s remain fluid and flexible but as it stands no particular reason to be bearish. With VIX falling and safe haven USD buying abating in a big way, these are supportive of higher equity prices. I want to lean bullish until price tells us other wise.
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