Archive for August, 2017

Sunday, August 27th, 2017

Option Queen Letter
By the Option Royals
Jeanette Young, CFP®, CMT, CFTe, M.S. and Jordan Young, CMT
August 27, 2017

Below is the link to the article that was written for ProActive Advisor Magazine.

The S&P 500 gained 1.5 handles (points) in the Friday session leaving a higher high with a higher low for the day, unfortunately, that candlestick is also a doji. The very short-termed uptrend line is at 2438. The down-trending channel lines are 2458.38 and 2406.48. All the indicators that we follow herein continue to issue a buy-signal. That said, the signal is a weak signal insomuch as it seems to be just drifting higher. The Bollinger Bands are steady. Our horizontal support line is at 2402.50 and we are trading around the mid-line in a trading zone pattern. The most frequently traded price on the Market Profile bimodal curve was 2441.95. The highest volume was seen at 2446.50 where 8.1% of the day’s volume traded. The point and figure chart is positive. As to the market in general. Although we are at a seasonally weak time of the year, September and August are the weakest months, the market does not seem to want to correct as yet. We do know a correction is coming but the facts are that we do not know when that will occur. We continue to believe that it will be an outside source that triggers that event and that the market will muddle along with stocks rotating until that event occurs.

The NASDAQ 100 lost 15.25 handles (points) in the Friday session with most of the trades in the negative camp for the day. The short-term uptrend line is at 5816.50 and the downward-trending channel lines are 5896.92 and 5701.75. All the indicators that we follow herein are pointing lower. The Bollinger Bands remain steady in mid-range. The most frequently traded price was 5844.15, most of which was traded in the overnight session. The highest volume of, 5.9% of the day’s volume was at 5827.95. We see a bimodal curve with the lesser bulge see in the day session at higher prices. The high for the day session was seen at 10:00am and the low for the day was seen at 11:30am. The remainder of the day was in a range with an attempt to regain some of the early losses but that failed and we closed closer to the bottom of the day’s range than to the top of the day’s range.

The US Dollar Index lost 0.747 handles (points) in the Friday session leaving a very large bearish engulfing candlestick on the chart. We traded to the horizontal support line at 92.38, which seems to have held, for the moment. The Bollinger Bands are beginning to expand from a very contracted level. The downward-trending channel lines are 93.36 and 92.38. The breakdown in the US Dollar index can clearly be seen in the Market Profile chart. The downdraft clearly was during the US day session. The initial sell-off occurred at 9:50am with support found at 1:00pm ending at 3:00 after which a downdraft of volume occurred, printing the day’s low at 3:10pm. This market needs to stay above 91.442 or risk a trip to 89.71 and considerably lower prices.

Crude oil gained 0.43 handles (points) in the Friday session. We seem to be consolidating below the uptrend line. The downward-trending channel lines re 48.19 and 45.46. Both the stochastic indicator and the RSI continue to issue buy-signals. Our own indicator is issuing a fresh sell signal. The Bollinger Bands are neither contracted nor are expanded and are giving us no information. The failure to hold above the short-term uptrend line is concerning. We wouldn’t be surprised to see the market probe to lower levels. As winter heating session approaches, it should have a positive effect on the price of crude. Also US Dollar weakness is positive for crude. The question should be asked why isn’t crude rallying in the face of a weak US Dollar and seasonally strong time of year?

Gold gained 4 handles (points) in the Friday session. We are above the short-term uptrend line and poked above the longer-term downtrend line. Both the stochastic indicator and the RSI are pointing to higher levels. The candlestick seen on the chart is a bullish engulfing candlestick. We printed a lower low then printed a high high closing above the downtrend line. The highs for the day were printed late during the day session and the lows were printed early in the day-session. The possible upside target for gold is 1377.50.

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