SPY traded strong for the week and tagged that 450 target into Jackson Hole friday I had been looking for. This market continues to be relentless with dip buying as long as the 8 and 21 EMA’s are pointing up and this week the impressive development was positive breadth readings on 4 of the 5 days. Stronger breadth continuing to start September would be a positive sign that the rally is broadening to more sectors and industries. The small caps had a fantastic 5% rally this week with IWM Russell 2000 regaining its 8/21 weekly EMA’s as well. This group could lead the next leg higher as it has consolidated for 6 months and poised to break out. Perhaps being long Russell small caps and growth names could be getting ready to be the trade. Also watching ARKK should be important as it is getting stronger and could start a larger upside move especially if its largest weighting TSLA can finally clear that 725 volume resistance. This is what I am positioning for overall until the charts say otherwise. Some of the best trades emerge when sentiment is more bearish leaning while price refuses to go lower, instead dips and shakeouts fake out weak longs and provide fuel for upside.
This week with Jackson Hole behind the markets, it will be a slower week but still Jobs report Friday the big catalyst along with some ISM and PMI econ data. Earnings reports of note from ZM, CRWD, DOCU, AVGO, OKTA, CHWY, MDB, FUTU, ASAN, PLAN, CIEN, STNE.
3 PEAKS MARKET SIGNALS OVERVIEW:
TREND- The short and long term trend of the market being bullish biased increases the odds of pullbacks being good buy opportunities.
SPX Short term trend of the 8/13/21 EMA’s. The 8 EMA is above the 13 EMA which is above the 21 EMA = Strong bullish trend.
SPX Long term trend of the 21/55/89 EMA’s. The 21 EMA is above the 55 EMA which is above the 89 EMA = Strong bullish trend.
CONDITION/BREADTH- SPX MACD Daily Momentum is back above zero and RSI is 64, still below previous highs and showing bearish divergences.
Cumulative Breadth Advance/Decline line recovered last week overall to add +2163 and closed above the 40 EMA. Breadth improving. NYSI Summation index trying to get that bull cross back above the 8 day MA. New 52 week highs on NYSE had 165 new highs on Friday and the 20 day average is 137. There were 32 new 52 week lows, a nice decrease from past few weeks.
SENTIMENT- AAII Investor sentiment survey Bullish sentiment rose to 39.6% Bulls from 33.2% last week. Bears ticked down to 33% from 35.1% last week. Bulls/bears ratio at 1.20.
Sentiment data is looked at as contrarian and Bullish signals occur when Bulls drop under 35%, or when Bears rise above 50%. Bearish signals occur when Bulls exceed 55% or if Bears drop under 20%.
S&P SPY Sector Glance:
10 of 11 S&P sectors are back in strong bullish short term trends as shown below. Energy the only sector in a bear trend and could potentially be trying to recover as it was strongest this week +7.5%. XLRE Real estate looking poised to break higher out of a coiled squeeze pattern. Fairly broad based rally this week with 6 sectors up 2% or more. Overall SPX up +1.52% for the week.
SEASONALITY ODDS:
This week seasonality shows potential weakness to start the week then somewhat stronger by end of week. 1st trading days of the month are generally positive but August and September are an exception to this rule as both months have been weaker on the 1st trading day of the month. Overall the following week after Labor Day holiday is stronger with markets up around 60% of years going back 21 years. This continues into triple witching options expiration week for September.
Seasonality odds are just tendencies based on historical patterns but always let price action confirm any trade setups.
Inside week bullish setup: Stocks that stayed within the high and low of its prior week. A break above these highs could trigger larger moves for fresh opportunities.
Home Construction ETF (ITB)
ITB has been forming a bullish weekly squeeze setup and the inside week candle last week sets up potential breakout towards 80-82. October 75 calls at 2.00 or better could be a solid risk/reward the next several weeks.
Bull Put Spread Trade of the Week:
Square (SQ)
Sell the October 260/250 put spread for 3.50 or better. Earnings not due out til after Oct expiration.
SQ was a good bull put spread trade I posted back in July so going back to the well with this clean uptrend looking to extend higher into 300. SQ has pulled back from 289 highs and the rising 50 day MA should hold as support on dips as all EMA’s are stacked positive and growth stocks have been strengthening so fairly good odds SQ can sustain above 260 into September.
Individual Stock Scans of note: Sorted by Market Cap
Weekly inside candles: AAPL, MSFT, UNH, HD, DIS, NKE, XOM, WFC, COST, CVX, SE, QCOM, HON, SBUX, BA, RTX, IBM, TGT, BUD, DE, CAT, BP, COF, FISV, CME, FDX, TWLO, FCX, EPD, NEM, WBA, HOOD, DD, AFL, KKR, CNC, CHWY, NTR, MT, DHI, ADM, LEN, VFC, WMB, VIAC, HIG, FOXA, TTWO, LBTYK, CAH, APO, DBX, MOS, CLF, TPR, UAA, UA, CF, NTNX, CHPT, FL, SONO, APPS, SEAS, FUBO, SPWR, WW, BLNK
8/21 EMA Daily Bull Cross: TSM, RDS/B, PDD, GE, ERIC, NTR, MT, PATH, DAL, OKE, IP, CFG, BBWI, BMRN, HTHT, PHM, HWM, EQH, TPR, IVZ, HST, CIEN, OVV, BRX, PK, IGT, VIAV, FNB, IOVA, CARG, SSRM, MOMO, RMBS, ABR, BLMN, ROIC, PRCH, TTCF, PBF
8/21 EMA Daily Bear Cross: BMY, DUK, VMW, DG, K, BURL, DLTR, RKT
Stocks compressing in TTM Squeezes within 10% of 52 week highs: AAPL, CMCSA, ORCL, AVGO, SHOP, MCD, HON, AMD, SQ, SNAP, SPGI, ADI, DOCU, NOC, GD, EA, NET, YUM, DHI, LEN, MCK, IP, DISH, CLF, FLEX, YETI, CSTM
55 day Highs with strong closes: GOOGL, NVDA, JPM, ACN, AVGO, MS, LIN, SCHW, GS, TEAM, BX, PNC, WM, AON, EMR, NXPI, CARR, EBAY, BK, BCE, APH, CDNS, PANW, STM, RSG, XLNX, ZS, STT, SYF, WY, HIG, LNG, HOLX, PAGS, PFG, NUAN, DKS, CMA, ZION, JEF, SEE, JHG, PLNT, AMKR, AZEK, FSK, QTS, ALKS, NAVI, GENI, MIC