The Market Scoreboard is a prelude to our Stock & Options Reports to ensure we’re on the right side of the markets.
In this report we will cover:
News that moves the markets
Market & Sector trends and key levels
Seasonality of markets and sectors
World markets, the dollar & key commodities
Finally, a pro trader’s thoughts & what strategies have been working best
It’s not only about getting in the game but being on the right team!
- News Highlights
- US Markets were lower all week on fears of a nuclear war between the US and N. Korea. N. Korea spoke of attacking Guam (and may have a nuclear weapon that can be placed on a missile), and President Trump said any further threats would be met with “fire and fury like the world has never seen before.”
- Gold and Silver posted their largest gains since April as investors left the stock market and placed their money in safe havens. Gold futures for December delivery on the Comex division of the New York Mercantile Exchange rose $3.40, or 0.26%, to $1,293.37 a troy ounce, and silver futures rose 1.01% to $17.034.
- US inflation in July increased only .1% as compared with the .2% that was expected according to the US Bureau of Labor Statistics. Core prices increased at an annualized rate of 1.7% in July, in line with consensus and the previous month’s increase. Core prices are viewed by the Federal Reserve (Fed) as a good gauge of longer-term inflationary pressure because they exclude the volatile food and energy categories. The central bank usually tries to aim for 2% core inflation or less.
- US producer prices recorded the biggest drop in 11 months. The Labor Department said its producer price index for final demand slipped 0.1 percent last month, weighed by decreasing costs for services.
- U.S. job openings jumped to a record high in June outpacing hiring in the JOLTS report, a possible indication that companies are having trouble finding qualified workers.
- TUE: Retail Sales
- WED: Housing Starts, EIA Petroleum Status Report, FOMC Minutes
- THUR: Jobless Claims, Philadelphia Fed Business Outlook Survey, Industrial Production,
- Click here for Next week’s economic calendar
- Click here for a current eMini S&P Futures Chart
- (click on symbol for chart)
- SPX – Neutral (in a Bullish Retracement)
DOW – Neutral (in a Bullish Retracement)
NASDAQ – Neutral (in a Bullish Retracement)
RUSSELL – Neutral to Bearish.
- Key Levels: Notice S&P 500 chart below
- Resistance – if the market happens to blast past 2460 on the way up (like it did on the way down) then 2480 would again be resistance since the market has not been able to stay above 2480
- Support – 2440 the market is at support, the next step would be 246. SITTING ON MANY DIFFERENT FIBONACCI LEVELS IN THE INDEXES. A break and close below these next week could trigger more selling.
- Trading – Bullish Retracement – broke below the 20-Day MA, Above 50-Day & above 200-Day MAs on Thursday so the market is under pressure but the major trend is still bullish if it bounces back up
- RSI – Below 50 – Bearish (this is a bearish signal, but we are not in a bear market yet)
- OBV – Currently Below the Moving Average; a bearish signal. The markets are under pressure but three days of retracement does not constitute a bearish market.
- Market Correlation below – even after almost two weeks of US markets rallying the International stocks are still outperforming when looking at the last quarter.
- INTERNAL STRENGTH
- Archipelago electronic exchange trades over 8,000 listed securities. If you looked at all those stocks on a three-month chart and counted how many made new highs versus those making new lows you would see the following chart:
- Currently at 45 (down from last week’s 94)
- This is an almost bearish signal with several days of new 3-month lows companies look for close below -50 for usually two days.
- Two closes above +50 = Bullish, two closes below -50 = Bearish
- SEASONALITY of Markets and Sectors
- Quick Guide: Best & Worst Sector Performance by Month 20-year average
- Best historically: Consumer Staples (XLP) and Utilities (XLU)
- Worst historically: Cyclicals (XLY) and Basic Materials (XLB)
- SECTORS & RANKING STATUS – (current)
- Tackle Gridiron August 11, 2017
- Broad Market Sector Spyder ETFs – click symbol for Sector trend, and click top 10 holdings for that sector to filter for trading candidates.
- Basic Materials (XLB) (top 10 holdings- click here)
Financials (XLF) (top 10 holdings – click here)
Industrials (XLI) (top 10 holdings – click here)
Technology (XLK) (top holdings- click here)
Energy (XLE) (top 10 holdings – click here)
Healthcare (XLV) (top 10 holdings – click here)
Cons. Cyclicals (XLY)(top 10 holdings – click here)
Cons. Staples (XLP) (top 10 holdings – click here)
Utilities (XLU) (top 10 holdings – click here)
- Thumbnail of all 9 major sectors click here
- Sector correlation performance chart
- World Markets/ The Dollar/ Key Commodities
- Commodity Index (GCC) – the commodities have been mixed this week, tension over the US and N,.Korea sent precious metals up in the middle of the week, and back down on Friday as tensions settled
- Gold (GLD) – Hit 1298 this week on fears of a conflict between the US and N. Korea, resistance is at 1300 per oz. there is support at 1265/1250 and then major support at 1200 (round numbers make for strong support/resistance).
Oil (USO) – after hitting 52 last week, crude has bitting falling below 50. It has hovered between 48 and 50 for most of the week.with the glut of supply and OPEC challenges crude is more likely to hit 40 than it is to hit 60
- WORLD WATCH
All-world excluding USA (VEU) – Like the US Markets had a strong retracement this week from its bullish run (this might represent a buying opportunity if you are a contrarian trader)
Global Emerging Markets (EEM) – Just like VEU had a strong retracement this week from its bullish run, (this also might represent a buying opportunity if you are a contrarian trader or you could just wait for confirmation to the upside)
- THE DOLLAR
USD weighted ETF (UUP) – Bounced off strong support at 92.50 and may be getting ready for a small regression, but the dollar is still within a strong long-term bearish trend
- Trader final thoughts and strategies:
- Wall Street had a rough week as tensions between the U.S. and North Korea prompted investors to take some profits on the heels of the stock market’s most recent run to new record highs. Small caps lead the retreat, sending the Russell 2000 2.7% lower, the S&P 500 dropped 1.4% lower, while the Dow Jones Industrial Average did a little better at -1.1% and the Nasdaq did a little worse at -1.5%
- What this means is that you need to treat the market as being under pressure, we are not in a bear market but the market could continue down if tension escalates between the US and North Korea. I would recommend that you hedge your positions in case there is a major market move in one direction or the other.
- The CBOE Volatility Index (VIX) spiked 5.5 points, or 54.7%, this week after drifting near an all-time low from mid-July to early August. The VIX shows what kind of a move, in percentage terms, the market is pricing in for a one-month period.
- What this means to you as an investor is that options prices are rising, I would recommend that you look at being a seller of options. Sell covered calls, sell naked puts, sell iron condors but make sure that you have your stops and exits in place in case the market turns against you.
- See you all in the Clubhouse and happy trading!
- Hector Duenas Jr. started his trading journey during the height of the tech bubble in 2001 as part of the 90% that loses money in the stock market.
- A Rich Dad conference in 2016 changed his life and now he writes the Morning Market Reports for Tackle Trading.
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