Notice: The weekend report is provided for informational purposes only and is not intended as a stock-picking service. The charts and information provided are intended to aid research and analysis and should only be used as indicators. They should not be considered as a direct trigger to buy or sell any security. The creator assumes no responsibility for any actions readers take and strongly advises each individual to fully understand the risks and potential consequences before making any investment decisions. Please note that the charts shared are not intended as signals to buy or sell but as a tool to add to your watchlist and analyze according to your trading ability. Remember that not all charts will result in buy or sell actions at any time.
This is just a friendly reminder that it’s essential to monitor the Daily Setups and Workspace scan results, which can provide insights into potential future additions and help you stay ahead of the game.
If you’re having trouble understanding the Daily Setups or need help crafting a trading strategy, don’t hesitate to ask for assistance. You can email us at info@setyourstop.com or reach me through the Workspace. Let’s schedule a meeting to address your specific requirements and provide you with the guidance you need.
Sample Trading System
The following trading system is presented as an educational example and should not be interpreted as financial advice. Past performance does not guarantee future results, and trading involves inherent risks. Please consult with a qualified financial advisor before implementing any trading strategies.
SYS Daily Report – Weekend Edition
Rotation Fuels Small Cap Surge Amid Nasdaq Struggles
The stock market’s ongoing rotation presents fresh opportunities, while the “Magnificent 7” mega-cap tech stocks face mounting pressure. Small-cap stocks are now attracting significant capital, with scanner results highlighting emerging opportunities across various sectors. This shift coincides with the Nasdaq falling below its 50-day moving average, as the S&P 500 reclaimed that level on Friday. Despite these developments, the price action on the major indexes remains unconvincing, suggesting a cautious approach of observation and reaction over prediction.
A key factor in the Nasdaq’s losses is the forced risk reduction by funds lightening positions due to rising volatility as the VIX index moved higher. This profit-taking is partly mechanical, reflecting the high P/E ratios of many tech stocks. The critical question now is how far these stocks must pull back before their valuations become justifiable in the current market environment. Looking at what worked last week, sectors heavily weighted in the Mag-7 stocks ended lower, along with discretionary and energy. However, every industry sector in the S&P 500 ended Friday higher, rebounding broadly from a volatile week. Scanner results remain robust, correlating with the Red-Light/Green-Light Breadth System pushing higher.
What Worked Last Week
The Red-Light/Green-Light Breadth System
In contrast, the small-cap Russell 2000 surged 3.5% for the week, nearing recent multi-year highs while consolidating above its upward-sloping moving average in a potential bullish pennant continuation pattern. The relative strength in the small-cap arena is undeniable, with the price action not even pulling back to test its 21-day moving average. Data indicates that small-cap sales are expected to increase each quarter this year, setting the stage for an average of 5% year-over-year growth in 2025. Provided costs remain controlled, profit margins could expand, leading to projected earnings growth of 19% next year, significantly outpacing the S&P 500’s expected 14% growth. This potential growth could fuel continued gains in small caps. Currently, the S&P 600 trades at about 15 times expected earnings for the coming year, nearly 30% below the S&P 500’s 20.8 times, marking one of the widest valuation gaps since at least 2010, according to 22V Research. Historically, such gaps have narrowed during periods of market confidence, as seen in 2021, 2015, and the years following the 2008-09 financial crisis.
Russell 2000 (ETF) – Daily Chart
The Dow Jones Industrial Average rose 1.6%, ending the week up 0.7%, surging higher from a bullish flag retest of its recent breakout line, which we suggested watching for in last weekend’s report.
Dow Jones Industrial Average – Daily Chart
The S&P 500 increased by 1.1% but finished the week 0.8% lower as it attempts to hold its 50-day moving average. The price action is forming a potential bullish flag continuation pattern, suggesting a binary event where Thursday’s lows represent downside risk and a break above the upper trendline could signal a bullish continuation. However, a break above the trendline does not guarantee an uptrend continuation, emphasizing the need to define downside risk and react to current market conditions without making predictions.
S&P 500 – Daily Chart
The Nasdaq Composite also gained but posted a weekly decline of 2.1% after experiencing its most significant daily drop since 2022 on Wednesday. The price action remains trapped below the 50-day moving average and horizontal resistance. Next week could be telling as more earnings reports are released.
Nasdaq – Daily Chart
The 10-year Treasury yield fell by four basis points to 4.2%, while the two-year yield dropped by 12 basis points to 4.39%. The yield curve continued to become less inverted, with the head and shoulders topping pattern persisting on the 10-year yield. We could see more movement next week with the Fed set to speak.
10-Year US Treasury Yield
The dollar remained mostly unchanged on Friday, influenced by a drop in Treasury yields, as both continue to correlate closely. A subdued U.S. inflation report, which investors believe clears the way for the anticipated Federal Reserve easing in September, also played a role. The dollar index, which tracks the greenback against six major currencies, including the yen and the euro, slipped 0.05% to 104.06. A break below the lower trendline of the pattern would be considered bearish.
US Dollar – Weekly Chart
U.S. crude oil futures fell 1.88% to $77.16 a barrel last week, marking a 7.2% decline over three weeks as price action consolidated sideways in the form of a triangle. Monitor this setup for potential directional breakouts, as energy names keep appearing in the scan results, especially on the Canadian side. A break below the lower trendline of the pattern would be considered bearish.
Crude Oil – Weekly Chart
The TSX index notched broad-based gains on Friday, with price action pushing higher from its giant cup-with-handle-type continuation pattern. It ended up 206.78 points, or 0.9%, at 22,814.81, after three straight days of declines. The index rose 0.6% for the week, marking its fifth consecutive weekly gain and extending its winning streak. Market breadth was strong on Friday, with green across the board and the Canada scanner results ending the week on a high note. This technical setup is bullish, and the rotation in the U.S. could continue to benefit the Canadian market. According to system rules, we would like to see price action stay above its upward-sloping 10-week or 50-day moving average, similar to the trend from the 2020 low.
TSX – Weekly Chart
Copper has fallen back to bounce off its 200-day moving average, a critical level to watch. We often discuss the range of possible outcomes. Three scenarios come to mind: the 200-day moving average doesn’t hold and breaks below, signaling increased bearishness; the price consolidates sideways along the 200-day moving average, forming a continuation pattern before moving higher; or, on rare occasions, it could potentially bounce strongly forming what we call a ‘V’ bottom.
While we can’t predict the outcome, this range of scenarios allows one to create a plan and define risk. Also, watch the scanner results for copper-related stocks to appear. Often, you’ll see a surge in copper names, especially in the Canadian market. When a sector starts showing up on the scan results as a whole (not just one or two names), it suggests that money is moving into that sector. Typically, mining stocks or producers will lead the commodity. This approach helps avoid staring at prices and making predictions, allowing for a reaction when the whole sector begins appearing on scanner results.
Copper – Daily Chart
The price of gold continues to consolidate sideways. As mentioned with copper and copper stocks, keep an eye on the scanner as a leading indicator. We often see a surge in gold mining stocks appearing on the scanner, suggesting that money is moving into the market. This movement typically signals that upward momentum in the price of gold is about to begin. This approach helps avoid attempting to catch a falling knife or predicting directional movement before it happens.
Gold – Daily Chart
The price of silver has finally reached a horizontal level of support following its triangle breakdown. Technically, there is no edge in this setup. If the price action fails to hold this support line, it could potentially test the 200-day moving average, similar to copper. Remember, gold and silver often correlate, so silver is likely to follow the price action of gold.
Silver – Daily Chart
The price action in Bitcoin continues to consolidate sideways within its well-defined trading range. Monitor for any potential breakout signals. Ideally, one would like to see the price action hold above the 21-day exponential moving average, as this has often been a marker during past momentum trends. A breakout above the upper trend line would be considered bullish, while a breakdown below the 200-day moving average would be bearish.
Bitcoin – Daily Chart
Ethereum continues to trade sideways, with the price action holding above its 200-day moving average following a surge in selling triggered by trading the first ETH ETFs.
Ethereum – Daily Chart
Solana continues to consolidate sideways below its 52-week high. Monitor for any potential breakout signals as the price action was recently rejected by the upper trendline of its consolidation area.
Solana – Daily Chart
In the upcoming week, headlines will be dominated by the Federal Reserve and earnings reports from big tech, but attention should also shift to non-tech sectors. Many industrial and construction firms will report earnings this week. Notably, homebuilding-related stocks have been prominent in scanner results and daily setups. Additionally, aerospace and financial stocks continue to show momentum.
The Week Ahead
Investors have recently had the chance to transition from tech to new leading sectors, with stop-loss orders likely triggered. At this point, tech exposure should be significantly reduced, and new watchlists should be populated with emerging names. As John Carter wisely noted, “It’s a rare trader who doesn’t make mistakes; it’s a great trader who learns from them.” Now, onto the daily setups.
US Daily Setups
BLD – TopBuild Corp.
TopBuild is attempting to move higher from a multi-month consolidation pattern.
LINK TO CHART – https://schrts.co/UCbKarVP
BLK – Blackrock, Inc.
Blackrock is attempting to break out from the right side of a significant multi-month base.
LINK TO CHART – https://schrts.co/vQCBQQxu
BRO – Brown & Brown Inc.
Brown & Brown appears to be breaking out from its trading range as momentum accelerates, with the price action trending above its upward-sloping moving average.
LINK TO CHART – https://schrts.co/yyNegXhv
ENSG – Ensign Group Inc.
Ensign Group is attempting to move higher from a bullish flag continuation pattern following its recent base breakout. Note the strong volume profile during the breakout.
LINK TO CHART – https://schrts.co/evNBPrJc
GE – GE Aerospace
GE Aerospace is setting up on the right side of a consolidation/continuation pattern. Monitor for any signs of upside momentum.
LINK TO CHART – https://schrts.co/hvrNvcYE
GFF – Griffon Corp.
Griffon appears to be set up for a new high breakout.
LINK TO CHART – https://schrts.co/qWgpWVqg
GS – Goldman Sachs Group, Inc.
Our Goldman Sachs setup from the continuation pattern at the beginning of July is now attempting to move higher from a bullish flag continuation pattern after consolidating above its upward-sloping moving average.
LINK TO CHART – https://schrts.co/uqhJcYEE
ITA – iShares U.S. Aerospace & Defense ETF
The iShares U.S. Aerospace & Defense ETF continues to see increased volume as the aerospace and defense sector gains traction. Monitor for any continued signs of upside momentum.
LINK TO CHART – https://schrts.co/mhHqymcy
LPX – Louisiana Pacific Corp.
Louisiana Pacific is attempting to break out to a new high.
LINK TO CHART – https://schrts.co/SizMAWbi
MSTR – MicroStrategy Inc.
MicroStrategy appears to be consolidating on the right side of its continuation pattern. Monitor any breakout in Bitcoin’s price action, as MSTR often acts as a leveraged bet on the cryptocurrency.
LINK TO CHART – https://schrts.co/jYZgSPuv
RYAN – Ryan Specialty Group Holdings Inc.
Ryan Specialty Group is attempting to move higher from a continuation pattern.
LINK TO CHART – https://schrts.co/bVZNEGPg
WS – Worthington Steel Inc.
Worthington Steel is breaking out from the setup highlighted on Thursday.
LINK TO CHART – https://schrts.co/VAvFAuMe
XHB – SPDR S&P Homebuilders ETF
The SPDR S&P Homebuilders ETF is attempting to move higher from another area of consolidation that we have been monitoring.
LINK TO CHART – https://schrts.co/SMatnCTw
XLF – Financial Select Sector SPDR Fund
The Financial Select Sector SPDR Fund ETF is attempting to move higher from a bullish flag continuation pattern following the recent 52-week high breakout that we highlighted.
LINK TO CHART – https://schrts.co/QeGWSCzy
XLI – Industrial Select Sector SPDR Fund
The Industrial Select Sector SPDR Fund ETF is attempting to move higher from an area of consolidation as the industrial sector gains traction.
LINK TO CHART – https://schrts.co/RkNvHIZw
Canadian Daily Setups
ACT.CA – Aduro Clean Technologies Inc.
The Aduro Clean Technologies setup we first highlighted as price action began to break out from its consolidation/continuation pattern is now breaking out to a new 52-week closing high.
LINK TO CHART – https://schrts.co/BCRnhEPK
ADEN.TO – Adentra Inc.
Adentra is now starting to push above its next layer of resistance, with price action consolidating above its upward-sloping moving average.
LINK TO CHART – https://schrts.co/tuitJNQA
ADN.TO – Acadian Timber Corp.
Acadian Timber is setting up for a potential new all-time high breakout.
LINK TO CHART – https://schrts.co/HhcuWNKP
BCE.TO – BCE, Inc.
BCE continues to show positive price action on the right side of its bottoming pattern as its upward-sloping moving average pushes higher. Monitor to see if the moving avearge can push the price through the horizontal resistance line of the pattern.
LINK TO CHART – https://schrts.co/CiJNYSbt
DFY.TO – Definity Financial Corp.
Definity Financial continues to set up at its 52-week high. Monitor for any signs of upward momentum, but be aware they report earnings on August 1. There is always inherent risk holding through an earnings report due to the potential for a gap lower if the company disappoints.
LINK TO CHART – https://schrts.co/YYSMPNDZ
ENB.TO – Enbridge, Inc.
Enbridge appears to be setting up for a potential 52-week high breakout as price action consolidates above its upward-sloping moving average.
LINK TO CHART – https://schrts.co/aYgreJMD
HPS/A.TO – Hammond Power Solutions Inc.
Hammond Power Solutions is attempting a continuation wedge breakout, supported by robust volume.
LINK TO CHART – https://schrts.co/EESjpIrs
IAG.TO – Industrial-Alliance Life Insurance Co.
Industrial-Alliance Life Insurance is setting up for a potential new all-time high breakout.
LINK TO CHART – https://schrts.co/FfAkTMIM
IMO.TO – Imperial Oil Ltd.
Imperial Oil is attempting to move higher from a multi-month consolidation/continuation pattern.
LINK TO CHART – https://schrts.co/XvDywrQc
PNG.V – Kraken Sonar Inc.
Kraken Sonar is showing up on the scan results as price action sets up below its 52-week high.
LINK TO CHART – https://schrts.co/UUjYdfRw
PRL.TO – Propel Holdings Inc.
The Propel Holdings setup shared on Thursday is now attempting to break out from the tight apex of its consolidation/continuation pattern, supported by robust volume.
LINK TO CHART – https://schrts.co/MPuMVJQS
WELL.TO – WELL Health Technologies Corp.
WELL Health Technologies appears to be setting up in the form of a potential bullish flag continuation pattern.
LINK TO CHART – https://schrts.co/iBeUsIXX
To conclude our report, we thank you for your engagement and insights. Your feedback is valuable, and we encourage you to share your recommendations. Stay attentive to the Daily Setups, the Workspace, and the Watchlists for emerging opportunities. Additionally, be sure to explore the PDFs of Friday’s scan results provided below. Until next time, happy trading!
US Scanner Results
Click on the CandleGlance chart to view it in full size. Find a chart that matches your criteria or interests. You can easily save it to your watchlist on StockCharts.com for further analysis and tracking or copy and paste the ticker list into your chart provider.
Canadian Scanner Results
Click on the CandleGlance chart to view it in full size. Find a chart that matches your criteria or interests. You can easily save it to your watchlist on StockCharts.com for further analysis and tracking or copy and paste the ticker list into your chart provider.
EXPORT – Canadian Scanner Results – 2024-07-27
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