A shock to the system…

Worst down day since May…

 

Recommendation:       Take no action.

 

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Stock Market Trends:


ETF Positions indicated as Green are Long ETF positions and those indicated as Red are short positions.


The State of the stock market is used to determine how you should trade.  A trending market can ignore support and resistance levels and maintain its direction longer than most traders think it will. 


The BIAS is used to determine how aggressive or defensive you should be with an ETF position.  If the BIAS is Bullish but the stock market is in a Trading state, you might enter a short trade to take advantage of a reversal off of resistance.  The BIAS tells you to exit that ETF trade on “weaker” signals than you might otherwise trade on as the stock market
is predisposed to move in the direction of BIAS.


At
Risk is generally neutral represented by “-“.  When it is “Bullish” or “Bearish” it warns of a potential change in the BIAS.


The Moving Averages are noted as they are important signposts used by the Chartists community in determining the relative health of the markets.

 

Best ETFs to buy now (current positions):

Long DIA at $212.80 on June 13, 2017.

Long QQQ at $140.01 on June 13, 2017.

Long SPY at $243.98 on June 13, 2017.

The actual entry price is reflected in current positions in this section.  Dividend Payments received adjust the
base price reflected in the table further above.

Click here to learn more about my services and for our ETF Trend Trading.

Value Portfolio:

 

Long SDRL at $9.90 on March 24, 2015.

Long SDRL at $9.70 on July 9, 2015.

Long SDRL at $8.11 on August 5, 2015.

 

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The major indexes opened lower and continued down that path through the
session.  Leading indexes took the largest hits with all falling near two percent or more.  In addition, the bank indexes fell
nearly three percent.  The Dow lost less than one percent and the S&P-500 lost less than 1.5%.
All other equity indexes that we regularly report on fell even harder.  The Dow is the only index
above its 20-, 50- and 200-Day Moving Averages (DMAs).  Most other equity indexes closed below
their 20- and 50-DMAs.  This left the bank indexes in downtrend states and the other equity indexes in trading
states.  The
Longer Term Bonds (TLT 126.37 +1.07) posted a fractional gain and shifted to an uptrend state closing above its 20-,
50- and 200-DMAs with a NEUTRAL BIAS.
Trading volume on the NYSE rose but remained light with 859M shares traded.  On the NASDAQ, volume increased remaining
average with 2.175B shares traded.

 

Apple
(AAPL 155.27 -5.16) fell more than three percent!  AAPL closed above its 20-, 50- and
200-DMAs but shifted to a trading state.  AAPL is the largest component of the NASDAQ-100 and the second largest of
the S&P-500, and a big component of the Dow. 

Seadrill Limited
(SDRL 0.32 -0.019) fell more than five percent.  SDRL closed below its 20-, 50- and 200-DMAs.  It remains in a trading
state.  SDRL has a BEARISH BIAS. 

 

In addition to the weekly natural gas inventory report, there were five economic reports of interest released:

·
PPI (Jul) fell -0.1% versus an expected +0.2% rise

·
Core PPI (Jul) fell -0.1% versus an expected +0.2% rise

·
Initial Jobless Claims for last week came in at 244K versus an expected 240K

·
Continuing Jobless Claims for last week came in at 1.951M versus the prior week’s 1.967M

·
Treasury Budget (Jul) came in at -$42.9B versus June’s -$112.8B

The first four reports were released an hour before the open.  The final report was released an hour
into trading.

 

The U.S. dollar fell a tenth of one percent.  The dollar is in a trading state.  The dollar closed below its 20-, 50- and 200-DMAs.  The dollar has a
BEARISH BIAS. 

 

The yield for the 10-year bond fell three basis points (-1.3%) to close at 2.212.  The price of a barrel of crude oil fell
ninety-seven cents (-2.0%) to close at $48.59.  Oil closed above its 20- and 50-DMAs.  It remains in an uptrend
state and is still below its 200-DMA.  Oil has a BULLISH BIAS.  The
U.S. government reported that natural gas inventories rose 28 bcf last week.

 

The implied volatility for the S&P-500 (VIX 16.04 +4.93) soared thirty-five
percent higher and closed above its to closed above its 20-, and 50- and 200-DMA
remaining in an uptrend state.  The implied volatility for the NASDAQ-100 (VXN 19.06 +3.63) soared twenty-four
percent.  It closed above its 20-, 50- and 200-DMAs and shifted to an uptrend state. 

 

Market internals were bearish with decliners leading advancers 6:1 on the NYSE and by 4:1 on the NASDAQ.  Down volume led up volume 6:1 on the
NYSE and by 4:1 on the NASDAQ.  Note: We have not seen these sort of extremes since October 11th last year.  The index put/call ratio fell -0.36 to
close at 0.69.  The equity put/call ratio rose +0.05 to close at 0.88.  Note: It is unusual for the index put/call
ratio to fall by a large degree on a large down day.  We don’t understand why more downside
insurance wasn’t taken out.

 

Conclusion/Commentary

 

AAPL fell more than three percent and was a big influencer on losses by the major indexes.  With that said, the vast
majority of stocks fell as near panic over a potential military conflict with North Korea spooked traders.  Safe
haven investments continue to be favored but we believe that stocks are more
likely to bounce here than continue a significant slide.  At this time, the dip should be viewed
as a buying opportunity as we believe the bulls will be buying on Friday.  Stay tuned.

 

Oil remains in the $50 range.  It remains below its 200-DMA but above the 20- and 50-DMAs and shifted to a trading
state.  Stay tuned.

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