BlueWolf’s Weekly Market Sentiment (New and Improved with Better Flavor!)

[BlueWolf]

I will use this thread to post a weekly technical analysis of the market, using the NASDAQ, Dow, and S&P indices. I will include my short and long term bias about market direction and a short list of stocks I will be watching at the beginning of each week for both short and long short-term trades. This thread replaces the old Blue Wolf Weekly Market Sentiment thread (RIP) with improved flavor and fewer calories.

[BlueWolf]

Market sentiment for the week ending August 9, 2019.

Short Term Bias: Neutral
Long Term Bias: Bullish

I have included an annotated daily chart for the NASDAQ. The S&P and Dow are similar, and I have therefore not included charts for these indices.

We had a pretty bearish week, and all three indices broke down and out of their short term regression channels. There is a lot of negative sentiment out there right now, and even though there are several technical indications that the current jink down is ripe for a reversal, I believe we could go either way. As far as technical indicators goes, the NASDAQ had a gap down and go red bar on Friday, but by the end of the day, buyers stepped in and created a significant bottoming tail. The index also bounced almost precisely on the 38% Fibonacci retrace level, i.e. a bullish retrace, of the last leg up of the long term trend. These certainly suggest that the index will bounce from here back to the upside. Last week the Fed cut interest rates, however, and this seemed to make a lot of investors squeamish about the economy. There is also the whole trade wars thing, which, instead of getting closer, seems farther away from resolution than ever. News always trumps candlestick patterns, so we’ll just have to see what the new week brings. For this reason I have a neutral short term bias, although I am ever so slightly bullish.

For the longer term, the pivots still tell me that the market is in a bullish trend. The NASDAQ (and other indices) have a long way to go to challenge the last pivot low, which would technically break the long term trend. I will start worrying about a long term trend change well before we take out the prior pivot low, however. If the indices continue down from here with vigor, base sideways, or bounce and fade before taking out the prior pivot high, I will be very concerned. At that point, I will have to deliberate long and hard about what to do with my long term positions, which up to now have been flourishing. There is no doubt about it, we are overdue for a prolonged bear market. The only question is when. So I am watching the indices closely with caution because I don’t want to take myself out of the bull market while it still has some legs. For now, my long term bias remains bullish. Technically, the indices sure look like they will be heading into another leg up, but while it’s useful to have a bias going forward, you can’t let that stop you from reacting to what the market actually does.

Annotated Daily Chart for NASDAQ:
https://www.dropbox.com/s/iql3pt4yco...%20AM.jpg?dl=0

Here are some stocks I will be watching at the start of the week for possible short term trades:
Long: BLUE (Looking for a bounce off support), CWBHF, RDFN
Short: APHA, ETSY, OTEX, VCYT

Good luck with your trading and investing.

[tiedyed1]

BlueWorlf, it is terrific seeing the new thread and that you are up and running again.
Your perspective is a great asset to this board. Thank you!

[Louetta]

Good write-up. Things aren't looking too promising overseas right now.

[mrmarket]

Welcome back...I am not liking the markets at all right now.

[BlueWolf]

Welcome back...I am not liking the markets at all right now.

This is panic selling of epic proportions. It will bounce at some point because we are deeply oversold, but my concern now is that soon after it bounces it will roll over again. This could be the start of a bear market, although I don’t think economic signs are pointing to a recession just yet, and it will take a recession to sustain a bear market. It could just be another mini bear market like we had last October through December.

[Louetta]

US futures were down close to 2% overseas an hour ago, have improved to about down 1.3% now. MSFT and AMZN were bid down after hours 2.5% so thought I might add to those. Figure this is mostly the work of three men: Trump (more tariffs), Xi (Yuan above 7) and Kim (couple more rockets fired) so adding to good businesses might be worth the risk at this point.

TTD might be worth a look. Down 10% from the recent high. What has changed for them?


By 930PM futures have improved again to down about -.75%.

[BlueWolf]

Mid week update for the week ending August 9, 2019.

Short Term Bias: Neutral
Long Term Bias: Bullish

It’s been an interesting week and a half to be sure, but we are in the midst of a bounce off the disastrous jink down. We closed the gap from Monday’s Yuan devaluation panic sell off, but anytime you close a gap, you are at a critical juncture. My inclination, because I am bullishly biased for the long term (I have no reason yet to change that), is to believe that we will continue up, maybe after some sideways consolidation. If I am going strictly by the technicals, however, a closed gap is an inflection point, so I have to wait and see, hence my neutral short term bias. In any event, I have attached an annotated daily chart for the NASDAQ to indicate what I am seeing.

Annotated Daily Chart for NASDAQ:
https://www.dropbox.com/s/71zjtsec7s...%20AM.jpg?dl=0

Good luck with your trading and investing, and congratulations again to the huge one for another winning pick with SEDG. No meat or cheese is too fine for you!

[Louetta]

I always enjoy staring at this three year advance decline line chart. Seems to say what you just said, long term trend in place with some near-term shakiness.

https://stockcharts.com/h-sc/ui?s=!A...d=p73367671490

[BlueWolf]

Market sentiment for the week ending August 16, 2019.

Short Term Bias:Neutral
Long Term Bias: Bullish

I have included two annotated daily charts for the NASDAQ (I will explain why there are two). The S&P and Dow are similar so am have not included separate charts for these indices.

It was an interesting week as we saw some recovery in the market after last week’s precipitous drop. We ended the week seemingly at an inflection point at which the market paused after bouncing back and completely filling last Monday’s large gap down. I am viewing the market’s action right now with a great deal of wariness. My concerns stem from the possibility that the indices are forming Head and Shoulders patterns. Technically, they haven’t completed the pattern yet, but the next week or two should tell the tale. The worst case would be for the indices to climb slightly higher, fail to make a new high, and then roll over. That would cement the H&S pattern and put us in wait and see mode for a break of the neckline. If that all plays out, I would have to give some serious consideration to unwinding some or all of my positions until the weather clears.

I included a second NASDAQ chart to show how a H&S preceded last year’s October plunge. It’s definitely a sloppy H&S, but it fits the criteria. We basically had a pivot high followed by a higher pivot high followed by a lower pivot high and then a break of both the neckline and the prior pivot low.

Once again, I have to say that I am having a hard time believing we are on the verge of a long term bear market just yet. The economic indicators are just not that bad, and I don’t see any signs that we are headed into a recession ... yet. So, if we do form a H&S and break the neckline followed by a market plunge, I think it will probably be a short term or mini bear market like the Oct-Dec bear market last year. Then again, we could plunge into a mini bear market and then watch the economic indicators deteriorate, which would provide fuel for the longer term. All of that is getting ahead of myself. For now, I will just be watching the market closely for the next several weeks. My personal hope is that the market will either slowly start climbing again or base sideways before starting to climb. The important thing, should the market start moving upwards again, is to take out the prior pivot high, i.e. to make new market highs. That will tell me that the bull market still has some life in it.

Annotated Daily Chart for NASDAQ:
https://www.dropbox.com/s/rlap6vls0h...%20AM.jpg?dl=0

Annotated Daily Chart for NASDAQ showing Aug-Oct H&S:
https://www.dropbox.com/s/tro5uknd6f...%20AM.jpg?dl=0

I’m not going to put out any stocks to watch this week because I am pressed for time. I have a friend’s funeral to go to. Getting old is a sad thing.

Good luck to all with your trading and investing.