For the most part, last week was an exciting time in the markets of “running in place.” The exciting part was Tuesday’s relatively large gap down and that was followed by the intraday power trend higher. I’ll explain more in the video below.
I believe that we can confidently say that we have entered into the “summer doldrums” for the markets. While Tuesday’s powerful reversal has not been negated, the rest of the week was a boring choppy grind that ended the week in most markets where they started.
While the NASDAQ composite was virtually unchanged on the week, the NASDAQ 100 that is less diversified saw bit of damage inflicted by the drop in Netflix. Overall, there was no change in the trend of either index.
Last week I said, “The current underperformance of the Transportation Index and narrowing yield curve must be monitored for any further deterioration. And, of course, we are doing that — and you should too.”
In support of our intermediate to long-term bullish bias, the Transportation index did move up almost 2% on the in the Financial index moved up just over 2% on the week. Those moves last week helped to repair the previous damage.
As long as intermediate to long-term interest rates are stable to moving higher (that was the case last week) the financial stocks should continue to improve.
When the broader markets have little movement, it’s hard to provide a short-term bias week to week, but the trends are up. With the improvement in the Transports and interest rates having a reversal higher last week, the markets underpinnings are still on solid ground.
The next wave of earnings reports will be seen this week with heavyweights like Google (GOOGL), Facebook (FB), MasterCard (M), Amazon (AMZN), Amgen (AMGN), and many others are on deck.
We’ll see if one or any of these can spark the market into a decisive move — even during the typical summer doldrums.
Dow Jones Industrial Average
Above is the chart of the Dow Jones Industrial Average that we review each week.
From the closing price of the candle marked 7/13 — which was a week ago from Friday, you can see that the closing price then is virtually the same as it was after last week’s activity and the close on 7/20.
Even with the almost 3.5 % gap higher in Microsoft (MSFT) on Friday, the DOW moved very little by week’s end.
The biggest mover in the Dow was JPMorgan, up just over 4.5% on the week, followed by Goldman Sachs up almost 2.5%. So it was the laggards doing the best overall.
This month, the Down has been trending up, but within a 1000-point range from the prior month. And since February, there has been little change, but a lot of movement up and down.
Weekly DOW Chart
The above weekly chart puts the range-bound view into a clear perspective.
This week, the Dow stocks reporting are:
Tuesday – UTX, MMM, and VZ
Wednesday – KO, BA, and V
Thursday – MCD, and INTC
Friday – MRK, CVX, and XOM
Outside of the Dow Index, there is a full lineup of earnings that are coming. We always check earnings before providing a recommendation and you certainly should be doing so on any of your own selections.
On a side note, if you are not getting text updates please email your cell # to dan@mastertrader.com and do check the updates in the Open Trade Spreadsheet.
Market Overview Video
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NEW STOCK TRADING IDEAS
Below is a daily chart of Trex Company, Inc. (TREX).
Trade: Over $69.27 consider buying stock.
Technical Setup: Bullish consolidation in top half of +WRB closing breakout above the r20-MA on the daily, bullish weekly and monthly.
Stop Loss: $67.38. Earnings 7/31 so close before then.
7/23: XBI – Over $101.17, consider buying XBI. Bullish consolidation above r20-MA at Major Resistance after 100% retracement and higher low on the daily, bullish weekly and monthly. Stop Loss: $98.45. NOTE: This was a prior suggested trade but never triggered and still looks great.
NEW OPTION TRADING IDEAS
Below is a daily chart of VanEck Vectors Semiconductor ETF (SMH).
Trade: Over $107.00, consider shorting Aug (8/3) $103.5/97.5 bull put credit spread (12 DTE) for mid-point but limit of $.55/share (closed at $.68/share).
Technical Setup: +Gap from Bullish engulfing support above r200-MA and two Bottoming Tails on the daily, bullish weekly and monthly.
Option Strategy: Bull Put Credit Spread (BPCS).
Stop Loss: $103.68.
Below is a daily chart of SPDR S&P Biotech ETF (XBI).
Trade: Over $101.06, consider shorting Aug (8/3) $98/94 bull put credit spread (12 DTE) for mid-point but limit of $.55/share (closed at $.66/share).
Technical Setup: Bullish consolidation above r20-MA at Major Resistance after 100% retracement and higher low on the daily, bullish weekly and monthly.
Option Strategy: Bull Put Credit Spread (BPCS).
Stop Loss: $98.38.
VIDEO REVIEW OF OPEN AND CLOSED TRADES
We had an active week, closing out 10 directional and option income trades all profitable (100% success rate). See the video below for a review of them.
Also, if you have never checked out the Master Trader Weekly Options Trader, it also had an active week, closing 11 of our short-term option income trades, 10 of 11 at nice profits (91% success rate), with one minor loss on VMW.
The Weekly Options Trader focuses solely on selling options and credit spreads expiring in 10 days or less around compelling patterns to generate weekly income. These trades are easy to find, enter and manage for any type of trader or investor.
Do yourself a favor and add it to your current subscription for a no-brainer $19/month add on investment.
Thank you for being a loyal subscriber and feel to email us with any questions or comments on anything.
Access Mastering Advanced Credit Spreads Course here, it’s the best $397 dollars spent to Master credit spread trading fast.
Master Trader and You Building Your Financial Future Together
Happy trading! If you have any questions or comments, please e-mail Greg Capra at Greg@mastertrader.com or Dan Gibby at Dan@mastertrader.com
All the best,
Greg Capra
Managing Director of Master Trader
Trading the Pristine Method — Origin and End
Dan Gibby
Chief Options Strategist
Follow Greg on Twitter, YouTube, and StockTwits
Twitter: @GregCapra
Stocktwits: Greg_Capra
NOTE: Master Trader will show opening and closing prices of all stock and options trades. We recommend that all traders and investors use proper share sizing for positions and money management. However, we cannot recommend what that is for your particular trading style, risk tolerance, or account balance.
We urge you to calculate your own share/position size based on your individualized risk parameters, Trading Plan, and familiarity with the proposed trade strategy and risk. Advanced Management Strategies (AMS) covers in detail foundational and advanced position and money management.
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All trade ideas and content are for informational and educational purposes only. It is not, nor is it intended to be, trading or investment advice or a recommendation that any security, option or investment strategy is suitable for any person. Trading securities can involve high risk and the loss of any funds. Investment or trading information provided may not be appropriate for all investors, and is provided without respect to individual financial sophistication, financial situation, investing time horizon or risk tolerance. Supporting documentation for any claims (including claims made on behalf of options programs), comparison, statistics, or other technical data, if applicable, will be supplied upon request. Master Trader Consulting, Inc. is not a licensed financial advisor, registered investment advisor, or a registered broker-dealer. Options, futures and futures options are not suitable for all investors. Prior to trading securities products, please read the Characteristics and Risks of Standardize Options and the Risk Disclosure for Futures and Options found here: CLICK HERE.
