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Good Morning, this is Capital Essence’s Market Outlook (the technical analysis of financial markets) for Tuesday April 11, 2017.
We’ve noted in the previous Market Outlook that: “technical pressures are building up as the market dances its way into an increasingly tight trading range.” As anticipated, stocks closed little change Monday amid geopolitical tensions. For the day, the Dow Jones industrial average rose 1.92 points, or 0.01 percent, to close at 20,658.02. The S&P gained 1.62 points, or 0.07 percent, to end at 2,357.16. The Nasdaq advanced 3.11 points, or 0.5 percent, to close at 5,880.93. The CBOE Volatility Index (VIX), widely considered the best gauge of fear in the market, jumped 9.17 percent to 14.05.
Weight Watchers International Inc. (WTW) was a notable winner Friday, soared 9.7 percent on strong volume to 16.40. This is bullish from a technical perspective. In fact, a closer look at the daily chart of TGH suggests that the stock could climb above 22 after the downward trend halted. Just so that you know, initially profiled in our April 7, 2017 “Swing Trader Bulletin” WTW had gained about 7% and remained well position. Below is an update look at a trade in WTW.
The graphics below are from our “U.S. Market Trading Map”, show the near-term technical bias and trading ranges. As shown, the underlying is in a short-term bullish trend when the price bars are painted in green. The underlying is in a short-term bearish trend when the price bars are painted in red. The yellow bars identify period of neutral or sideways trading pattern. Additionally, the light-blue shading represents the short-term trading range. A move above or below that range is considered overbought (as represents by the red shading) or oversold (as represents by the dark-green shading). Readings above or below the red and green shaded areas are considered extremely overbought or extremely oversold.
Chart 1.1 – Weight Watchers International Inc. (daily)
As indicated in the above chart, our “U.S. Market Trading Map” rates WTW as a Buy. The overall technical outlook remains Bullish. Last changed March 27, 2017 from neutral.
After peaking in early March along with the rest of the market, WTW has been trending lower as in an intermediate term correction. The correction found support at the trend channel moving average (as represents by the white line in the chart). Monday’s upside breakout had helped clear resistance at the March falling trend line, suggesting that WTW might have switched to a new upswing. Money Flow measure held firmly above the zero line since the stock reached an interim low in December, indicating, there was little selling interest. This is a bullish development, supporting further upside follow-through and a retest of the March high near 20. A sustain breakout above 20 has a measured move to 22.60, based on the 127.2% Fibonacci extension.
Short-term traders could use the trend channel moving average of 15.23 as the logical level to measure risk against.
Since reaching an interim low in March, SPDR Gold Trust (GLD) has traded in a range but there could be gains for the yellow metal, according to our “U.S. Market Trading Map”. Below is an update look at a trade in GLD.
Chart 1.2 – SPDR Gold Trust (daily)
Our “U.S. Market Trading Map” was looking at GLD from a Buy side back. The short-term technical trend shifted to bullish from neutral on April 7, 2017. Over the past few weeks, GLD has been basing sideways near the March high as it worked off overbought conditions. With Money Flow measure above the zero line, odds favor an upside breakout. A close above the 120.67 has a measured move to 124.76, based on the November high.
With respect to key levels, GLD has minor support near 119. Short-term traders could use that level as the logical level to measure risk against.
Chart 1.3 – S&P 500 index (daily)
Short-term technical outlook remains neutral. Last changed April 3, 2017 from bullish (see area ‘A’ in the chart).
[Note: for more details analysis, please take a look at our “US Market ETF Trading Map”]
The near-term picture remains the same. There is a consolidation around the apex of the 3-week triangle. Technically speaking, triangle is considered to be a continuation pattern, which often resolved in the direction of existing trend. However, with Money Flow measure below the zero line, odds does not favor a sustain breakout. Traders should be aware of a “head fake.” Hold off for a day or two after the breakout and determine whether or not the breakout is for real.
A breakout above the March falling trend line, indicates that the triangle has resolved itself into a new upswing. A break above 2372 has a measured move to 2400.
As mentioned, the trend channel moving average, currently at 2348, is the line in the sand. We’d turn particular bearish if the index close twice below that level. A break below 2348 has a measured move to 2300-2280, which we’ve determined using our proprietary trading system.
Short-term trading range: 2348 to 2377. S&P has support near 2348. A failure to hold above that level suggests shows that most of the potential buyers at this level had already placed their bets. The next batch of buyers typically sits at a much lower level. The result is that the decline has a clear run down to the next support level near 2280-2300. Immediate resistance is around 2372. A sustain breakout above that level has a measured move to the March high of 2400.
Long-term trading range: 2315 to 2410. Unless there is a headline that everyone recognizes as extremely positive or negative, expect S&P to swing within the 95 points range.
Bottom line, after peaking in early March, the S&P has morphed into a triangle trading pattern. Triangle patterns are known to experience early breakouts that give traders a “head fake.” Traders should hold off for a day or two after the breakout to see if the breakout has some legs. With that in mind, we’d turn particular bearish if the index close twice below 2348.
(By：Michelle Mai for Capital Essence)
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