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.
Just a friendly reminder: We update the sector watchlists every weekend. We highly recommend that you take some time to browse and create your watchlist. Please pay close attention to the Daily Setups and Workspace scan results for potential future additions to stay ahead of the game.
If you’re facing challenges understanding the Daily Setups or need help crafting a trading strategy, don’t hesitate to ask for assistance. You can contact me via email at info@setyourstop.com or reach me through the Workspace. Let’s schedule a Zoom meeting to address your specific requirements and provide you with the guidance you need.
SYS Daily Report – Weekend Edition
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Market Commentary
Summary: The stock market rally faced adversity this week, witnessing all major indexes slip below their 50-day moving averages—an ongoing focal point in our daily reports. A hopeful rally on Friday morning, which initially showed promise, faltered as it gradually lost momentum while grappling with the underbelly of the 50-day moving average. Apple’s stock endured a notable setback, experiencing a nearly 6% decline throughout the week. This decline exerted downward pressure on the major indexes, culminating in the S&P 500 Information Technology sector losing over 2% in value. In parallel, our energy theme continued to exhibit strength, with crude oil futures surging by 2.3% to reach $87.51, even as the dollar index’s weekly winning streak achieved its longest run since 2014. Meanwhile, the uranium theme maintained its trend, touching a new 17-month high, defying the broader market challenges.
Equities: Despite the somewhat lackluster week and the price slipping below the 50-day moving average, the S&P 500 managed to scrape together a modest gain on Friday. However, this gain fell far short of the session’s high. In contrast, all three major indices on Wall Street ended the week in the red. This downturn was driven by concerns about fluctuating interest rates and worries about upcoming U.S. inflation reports, which weighed heavily on the confidence of investors.
Trading Landscape: Amidst the current financial landscape, market breadth has exhibited signs of fragility, casting a discernible shadow over the present market landscape. The prevailing uptrend finds itself under the heat lamp as price action chops sideways, attempting to seek direction. This environment warrants caution to our readers when contemplating fresh positions. But remember, the market’s temperament can change in the blink of an eye, so we must remain focused. Presently, all eyes in the U.S. stock market are focused on next week’s inflation data, set to serve as the compass guiding the near-term direction of our somewhat uncertain equity rally. Wall Street and investors at large find themselves perched on the edge of their seats, fully cognizant of the significance these forthcoming numbers hold.
Currencies: The dollar index was on course for its longest winning streak since 2014 despite a Friday pullback. In contrast, China’s yuan hit its weakest level since 2007 amid concerns about the country’s slowing economy. Strong U.S. economic data raised worries that the Federal Reserve might keep rates high even if unchanged this month. The yen continued its slide, trading near a 10-month low against the dollar, despite warnings from Japanese authorities about potential currency intervention. The euro remained near a three-month low versus the dollar.
Bonds: Treasury yields displayed a mixed performance as the week drew to a close, but on the whole, they recorded gains. The yield on the 2-year Treasury climbed by 2.9 basis points, reaching 4.98% from Thursday’s 4.95%. Throughout the week, it saw a notable increase of 11.6 basis points, marking a rise in 14 of the past 18 weeks, highlighting its sustained upward trajectory. Conversely, the 10-year Treasury yield experienced a modest decline compared to its Thursday level, settling at 4.26%. The yield on the 30-year Treasury slipped by 2.2 basis points, declining from 4.35% on Thursday to 4.33%. Over the week, the 10-year and 30-year rates recorded significant increases of 8.4 basis points and 4.5 basis points, respectively. These gains represent their most significant weekly advancements in three weeks.
Commodities: The CRB Commodity Index pushed to a fresh one-year high at 284.47. In the precious metals arena, gold experienced a 1.24% decline, settling at $1,942.70, while silver saw a steeper fall of 5.65% to reach $23.17. Copper also faced a setback, dropping by 3.52% to $3.75. On the energy front, crude oil made gains of 2.29%, reaching $87.51, while natural gas declined by 5.79%, sliding to $2.61. Meanwhile, uranium surged through $62 to hit a 17-month high. In the realm of soft commodities, lumber managed to gain 1.30%, reaching $507.32.
Conclusion: Over the past week, our sector themes, primarily centered around energy and uranium, continued to ride the wave of positive momentum. While some growth stock setups encountered challenges aligning with the broader market’s ebbs and flows, our outlook remains cautious. This caution arises from the fact that price action remains trapped beneath the 50-day moving average on major indexes, and we’re entering the historically volatile month of September. As we navigate these conditions, our focus remains on monitoring the strength of the U.S. dollar and closely observing 10-year treasury yields for any meaningful directional cues in this uncertain landscape.
S&P 500 – Weekly Chart
The S&P 500 remains in a grinding phase, hovering around the 10-week moving average, equivalent to the 50-day moving average. This is occurring within the historically volatile month of September, with rising treasury yields, a flurry of economic data releases, and a strengthening US dollar. It’s safe to say there’s a substantial wall of worry, with numerous headwinds at play. As we await the developments of the upcoming week, the market’s direction is yet to be determined. Stay tuned for further updates.
Nasdaq 100 – Weekly Chart
The analysis that applies to the S&P remains valid for the Nasdaq, as both charts exhibit similar patterns and trends.
Russell 2000 (ETF) – Weekly Chart
The Russell 2000 seemed to relinquish what initially appeared to be a promising setup, as last week concluded. This week, it closed with a loss of 3.63%, accompanied by the weekly PPO momentum indicator turning downward. However, price action continues to chop around within the cup base, and its ultimate direction remains to be determined.
TSX – Weekly Chart
The TSX chart experienced a rejection from the upper trendline of the pattern we’ve been monitoring, even in the presence of tailwinds from a strong week for oil. With the price action currently consolidating near the apex of the pattern, the ultimate direction is still uncertain. The trendlines of these patterns demonstrate how they allow one to anticipate an expected outcome, as they can serve as a green-light, red-light scenario and illustrate one of the potential outcome ranges if attempting to front-run a directional breakout while the price remains trapped.
US Dollar – Weekly Chart
The US dollar continues to demonstrate strength by breaking above the horizontal resistance line highlighted in last weekend’s report, contributing to market volatility. US dollar strength often acts as a headwind for equities.
Bond Yields
As we shift our focus to the bond market, we observe a nuanced performance in Treasury yields as the week concludes. While there was a mix of movements, overall, they recorded gains. Specifically, the 2-year Treasury yield showed strength by climbing 2.9 basis points, reaching 4.98% from its Thursday value of 4.95%. This increase marked a noteworthy gain of 11.6 basis points throughout the week, underscoring its sustained upward trend observed in 14 of the past 18 weeks. Conversely, the 10-year Treasury yield experienced a modest decline compared to its Thursday level, settling at 4.26%. Similarly, the 30-year Treasury yield decreased by 2.2 basis points, from 4.35% on Thursday to 4.33%. Notably, the 10-year and 30-year rates recorded substantial weekly increases of 8.4 and 4.5 basis points, respectively, representing their most significant weekly advancements in three weeks.
10-Year US Treasury Yield
The 10-year Treasury continues to trade within a tight range, hovering above the upward-sloping moving averages and the horizontal resistance line of a substantial cup base formation. The question remains: Will the moving averages provide the necessary momentum to push the price through the top of this pattern? Only time will tell. As previously discussed in the daily report, a breakout from this chart pattern would imply a continuation of the uptrend, introducing yet another headwind for stocks. We eagerly await the developments in the upcoming week.
CRB Index Weekly – Chart
The CRB index is currently hovering above the recent breakout from the bull flag pattern, with relative strength and the weekly PPO momentum indicator showing a slight upward trend.
Crude Oil – Weekly Chart
The bullish trend in oil remains intact despite US dollar strength, as the price of WTIC has broken out above the horizontal resistance line we highlighted last week. We are now monitoring for a continuation of upside momentum while keeping an eye on the Energy Watchlist for opportunities.
UGA – United States Gasoline Fund ETF
The United States Gasoline Fund ETF was featured in the Thursday report due to its price action consolidating at the apex of a continuation triangle. This pattern is situated above an upward-sloping 50-day moving average while remaining below 52-week highs. We continue to monitor this chart for signs of a potential continuation of the uptrend.
In addition, we identified a few setups on Thursday that hinted at possible upside momentum, and these ideas indeed broke out nicely on Friday. Notable names from this list include MPC, PSX, and VLO. It’s worth noting that in the refining sector, the crack spread plays a significant role. Nevertheless, for the time being, we rely on the signals provided by the charts.
As we move forward, keep a close eye on the Energy Watchlist and the Daily Setups for any future opportunities as they materialize.
Copper – Weekly Chart
The price action of copper for the week proved less than encouraging as it descended towards the lower trendline of the apex. A breakout below this lower trendline of the pattern would bear a significant bearish signal, potentially indicating a continuation of the downtrend that originated from the March high.
Gold – Weekly Chart
The price of gold continues to oscillate near the apex of a pennant formation situated within a larger basing pattern. The direction emerging from the pennant formation is still pending and has yet to be determined.
Silver – Weekly Chart
The price of silver concluded the week with a nearly 6% decline while it continued to fluctuate near the apex of a pennant formation nested within a larger basing pattern. Like gold, the direction to emerge from this pennant formation remains pending and has not yet been determined.
Uranium Theme – Global X Uranium ETF
The uranium theme concluded the week with relatively stable performance, as the price action of previously highlighted setups remained above upward-sloping moving averages following their base breakouts. Notably, the price of uranium closed the week at a 17-month high, indicating a favorable outlook for the continuation of upside momentum in the sector.
As the age-old saying goes, ‘the trend will be a friend until the one time it’s not.’ As long as the price action remains above the upward-sloping moving averages, the trend will persist until, of course, it doesn’t.
What Has Worked Last Week
When reviewing what worked last week, the title should be changed to ‘What Did Not Work Last Week.’ However, the standout exception was the energy sector, which continues to accel, aligning with our energy theme and my strategy of seeking sectors that not only outperform the indexes but also exhibit low correlation.
Chart Setups Spotlighted from Weekend Watchlists
Now, let’s delve into the setup section of the newsletter. As a reminder, I update the sector watchlists every weekend. It’s highly recommended that you take some time to review and create your watchlist. Additionally, please pay close attention to the Daily Setups and Workspace scan results for potential future additions to stay ahead of the game. In this part of the weekly report, I will showcase setups from each watchlist signaling the potential of momentum, complete with links. However, it’s important to note that there may not always be setups to highlight, as sector correlations can vary with overall market sentiment.
Canadian Energy
CR.TO – Crew Energy Inc.
Crew Energy finds itself positioned near the apex of a continuation pattern. It’s prudent to closely monitor this situation for signs of an upside momentum.
KEL.TO – Kelt Exploration Ltd.
Kelt Exploration is a chart that has been consistently featured in our analysis, showcasing persistent signs of upside momentum.
STEP.TO – STEP Energy Services Ltd.
Step Energy Services seems to be in the process of initiating a breakout from a notable falling wedge continuation pattern.
Energy
HP – Helmerich & Payne Inc.
Helmerich & Payne seems to be positioning itself just below the upper trendline and horizontal resistance of a continuation pattern. Monitor closely for a potential breakout.
PARR – Par Pacific Holdings Inc.
Par Pacific is currently consolidating within a bull flag or continuation pennant pattern. It’s worth noting the presence of a large volume by price bar, indicating accumulation within this pattern. Be watchful for any signs pointing to the continuation of the uptrend.
XOM – Exxon Mobil Corp.
Exxon Mobil is steadily advancing toward the apex of a substantial basing pattern, situated just below new highs. Keep a vigilant watch for a potential breakout.
Communication Services
Communication Services Watchlist
GOOGL – Alphabet Inc.
Alphabet is currently forming a flag pattern just below its 52-week highs. Keep a close watch for potential signs of a continuation in the ongoing uptrend.
Consumer Discretionary
Consumer Discretionary Watchlist
ABNB – Airbnb Inc.
Airbnb is currently positioning itself just below a horizontal resistance line, not far from its 52-week highs. Keep a vigilant eye on the stock for potential signs of a continuation of the uptrend.
AFYA – Afya Ltd.
Afya is forming a continuation pattern on the right side of a substantial base, just below its 52-week highs. Closely monitor the stock for potential upside momentum that may culminate in a breakout.
MAR – Marriott International, Inc.
Marriott seems poised within a bullish continuation pennant pattern, positioned just below its 52-week highs. Be on the lookout for any potential breakout signals.
Financial
IBKR – Interactive Brokers Group, Inc.
Interactive Brokers is a chart we’ve consistently featured for months, showcasing a noteworthy breakout from its substantial base as it continues to ascend towards new highs in price action.
MA – Mastercard
Mastercard is currently flagging just below new highs. Keep a close watch for potential indications of a continuation of the upward trend.
V – Visa Inc.
Visa is currently consolidating just below new highs. Keep a close watch for potential indications of a continuation of the upward trend.
Materials
CF – CF Industries Holdings, Inc.
CF Industries appears to be breaking out from a notable continuation pattern, successfully surpassing horizontal resistance. Furthermore, the weekly PPO momentum indicator is making an attempt to cross back above the zero line, indicating a potential shift in momentum.
Semiconductors
LSCC – Lattice Semiconductor Corp.
Lattice Semiconductor is presently in the process of forming a significant consolidation pattern, with its price action currently situated below recent all-time highs. While the chart may not exhibit immediate signs of momentum, it could merit inclusion on a watchlist, where one can carefully monitor for potential breakout signals in the future.
Software
CRM – Salesforce.com, Inc.
Salesforce is currently undergoing consolidation, just below its 52-week highs. It would be prudent to add this stock to your watchlist and closely monitor it for potential signs of a continuation of the uptrend.
MSFT – Microsoft Corp.
Microsoft has undergone consolidation, taking the form of a bull flag continuation pattern, or one could describe it as having formed a handle on the right side of a notable cup base. This pattern is positioned just below new all-time highs. Be attentive to any signs indicating a continuation of the upside momentum, as it could result in a breakout, implying the continuation of the uptrend.
ORCL – Oracle Corp.
The Oracle setup that we’ve been spotlighting continues its upward trajectory, maintaining its position above the moving averages.
Staples
COST – Costco Wholesale Corp.
Costco is currently positioning itself near the apex of a substantial consolidation pattern. It would be prudent to closely monitor this stock for any indications of potential upside momentum that could result in a breakout.
SFM – Sprouts Farmers Market Inc.
Sprouts Farmers Market is currently consolidating just below its recent highs. Monitor for potential signs of a continuation of the uptrend.
WMT – Walmart Inc.
Walmart seems poised to sustain its upward momentum, following the breakout from a substantial basing pattern, leading to new highs.
Technology
ANET – Arista Networks, Inc.
Arista Networks is currently consolidating just below its recent highs.
PANW – Palo Alto Networks Inc.
Palo Alto Networks is making an attempt to trend higher from a continuation pattern. Keep an eye on the recent volume by price bar, as price action prepares to push above.
SMCI – Super Micro Computer, Inc
Super Micro Computer is digesting its recent surge, consolidating just below new highs. Watch for potential indications of upside momentum.
That concludes our weekend report, folks. Thank you for joining us on this insightful journey. Your recommendations and suggestions are always welcome, so please don’t hesitate to reach out. Remember to keep a close watch on the Daily Setup, the Workspace, and the Watchlists for fresh ideas as they emerge on our radar. Until next time, happy trading!
