SYS Research – Weekend Report – September 7, 2024

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

Small-Cap Stocks Show Potential as Major Indexes Face Steep Losses

This week, the stock market faced significant challenges, with major indexes posting their worst declines in months amid concerns over weakening economic data and investor anxiety surrounding Federal Reserve policy. The tech-heavy Nasdaq Composite led the selloff, plunging 5.8% for the week, its worst performance since January 2022. The S&P 500 fell 4.25%, and the Dow Jones Industrial Average dropped 2.9%, marking their worst weeks since March 2023. All three indexes closed lower Friday, driven by disappointing jobs data and inflation concerns. This caused the red-light/green-light breadth system to issue a red-light signal.

Nasdaq – Daily Chart

S&P 500 – Daily Chart

Dow Jones Industrial Average – Daily Chart

The Red-Light/Green-Light Breadth System

The ongoing slump in artificial intelligence-related stocks continued to weigh heavily on the broader market. Nvidia, a leading player in the AI sector, saw its shares drop 14% this week, erasing over $400 billion in market capitalization—the largest weekly loss in value by a single company on record. Broadcom, another tech giant, contributed to the sector’s troubles with a weaker-than-expected revenue forecast, resulting in a 10% decline in its shares.

Having a stop-loss order at the moving averages, in line with system rules, or at the bottom of a trading range could have spared investors significant losses during the AI downturn. Additionally, avoiding new purchases when prices fall below declining moving averages can help avoid many downtrends. While all downtrends eventually reverse, trying to predict when that will happen is a gamble. As I often say, don’t trade based on ‘I think’ or ‘I feel’—instead, react to what’s actually happening. The stock market provides real-time feedback, and there’s no disputing it—what’s happening now is reality, regardless of what people think or feel might occur in the future. The market tape always reveals the truth. Below are two charts I shared earlier this week: one showing a sell signal or short position on the SMH semiconductor ETF, and the other a short position on the Nasdaq via the ProShares UltraShort QQQ ETF. Both adhered to system rules and performed well throughout the week, tracking their moving averages.

These are just examples, but once a trade is in profit, it offers more flexibility. This is where the ‘art’ of trading comes into play—deciding whether to take profits, take partial profits, or allow the moving average to serve as a trailing stop-loss, which will automatically exit the trade when triggered. The choice ultimately depends on each individual’s strategy.

SMH – 60-Minute Chart (Featured in Tuesday’s Report)

SMH – 60-Minute Chart (As of Friday Close)

QID – 60-Minute Chart (Featured in Tuesday’s Report)

QID – 60-Minute Chart (As of Friday Close)

Despite the overall market downturn, with the Russell 2000 testing its recent breakout line, there is growing optimism around small-cap stocks, which could see a resurgence in the coming months. Historically more sensitive to U.S. interest rates and economic conditions, small-caps have lagged behind large-caps, as inflation and rising borrowing costs have hit smaller companies harder. The Russell 2000 index of small stocks has underperformed for nearly a decade, returning 8.91% annually over the past ten years, compared to 15% for the large-cap S&P 500. However, analysts predict small-cap earnings could grow by 22.1% in 2025, outpacing the expected 14.8% growth in the S&P 500.

With inflation beginning to cool and the Federal Reserve signaling potential rate cuts in the near future, small-caps may benefit as borrowing costs decline and the economy stabilizes. Investors have already started to take notice, with small-cap exchange-traded funds (ETFs) attracting $25.1 billion this year, nearly triple the $9.4 billion invested during the same period in 2023. With all that said, one has to wait for the chart to set back up versus trying to catch a falling knife based on what “should happen.”

Russell 2000 (ETF) – Daily Chart

Meanwhile, Friday’s jobs report added to concerns about a slowing economy. The U.S. added 142,000 jobs in August, falling short of expectations, while the unemployment rate held steady at 4.2%. Canada’s unemployment rate climbed to 6.6%, the highest level since 2016 outside the pandemic years. The bond market reacted accordingly, with Treasury yields dropping as investors sought safe-haven assets. The yield curve, which had been inverted for over a year, finally returned to normal on Friday, with the 10-year Treasury yield rising above the 2-year yield.

10-Year US Treasury Yield

The energy and materials sectors also saw notable declines this week as price action fell through the bottom of its pattern. Crude oil prices fell 8% to $67.67 a barrel, their lowest level since June 2023, while gold and copper prices dropped, pulling down shares of metal miners and commodity-linked companies.

Crude Oil – Weekly Chart

Gold – Weekly Chart

Copper – Daily Chart

This caused the TSX Composite Index to fall 206.85 points or 0.9%, closing at 22,781.43, marking its fourth straight day of declines and a 2.4% weekly loss. However, it bounced from its 50-day moving average. Technology shares also took a hit, with Celestica Inc. tumbling 10.2% to a seven-month low. However, Enghouse Systems bucked the trend with a 5.6% gain following stronger-than-expected quarterly earnings.

TSX – Daily Chart

In the coming week, attention will turn to inflation data and key earnings reports from companies like Oracle, Adobe, and Kroger. The August Consumer Price Index (CPI) and Producer Price Index (PPI) are expected to provide further clues on inflation trends, which could influence the Fed’s next move at its September meeting.

As the market adjusts to the shifting economic landscape, investors should carefully assess their exposure, prioritize diversification, and look for opportunities in sectors that may outperform as interest rates fall and growth stabilizes. As Paul Tudor Jones wisely said, “You must manage risk like a professional, not like an amateur hoping for a lucky break.” Now, let’s move on to the daily setups.

US Daily Setups

AMT – American Tower Corp.

American Tower is positioning itself just below a new high after four days of strong volume.

LINK TO CHART – https://schrts.co/TdpcTWBe

 

CCI – Crown Castle Intl Corp.

Crown Castle is positioning itself for a potential breakout from a bottoming base.

LINK TO CHART – https://schrts.co/KwqYdhEc

 

DOCU – Docusign, Inc.

DocuSign is attempting to move higher from a significant multi-month consolidation area, supported by increased volume.

LINK TO CHART – https://schrts.co/gfEVdzQQ

 

FLUT – Flutter Entertainment Plc

Flutter continues to hold above its moving average amid market volatility as price action attempts to break out.

LINK TO CHART – https://schrts.co/cDhazuHZ

 

IOT – Samsara Inc.

Samsara is attempting to break out from a significant multi-month consolidation pattern, reaching a new 52-week high.

LINK TO CHART – https://schrts.co/cCpuIYBD

 

PHM – PulteGroup, Inc.

PulteGroup is consolidating in a potential bullish flag continuation pattern, just below its 52-week high.

LINK TO CHART – https://schrts.co/YegaCGqg

 

PLTR – Palantir Technologies, Inc.

Palantir has pulled back to retest the recent breakout line, forming a potential bullish flag continuation pattern.

LINK TO CHART – https://schrts.co/IzHDyZeS

 

RYTM – Rhythm Pharmaceuticals, Inc.

Rhythm Pharmaceuticals is consolidating into a tight range on the right side of a significant multi-month consolidation area, just below recent highs. Monitor for any potential breakout signals.

LINK TO CHART – https://schrts.co/WRgCPhri

 

SMAR – Smartsheet, Inc.

Smartsheet has experienced another day of strong volume.

LINK TO CHART – https://schrts.co/ZnmQgbHI

 

T – AT&T, Inc.

AT&T continues to reach new highs with increased volume as investors seek reasonably priced stocks that offer a high yield.

LINK TO CHART – https://schrts.co/PWDqISHQ

 

Canadian Daily Setups

ARR.TO – Altius Renewable Royalties Corp.

Altius Renewable Royalties appears to be breaking out from a consolidation area, supported by strong volume.

LINK TO CHART – https://schrts.co/wdDSYcBn

 

CCL/B.TO – CCL Industries Inc. – Class B

CCL Industries experienced another positive day, which was particularly notable given the overall market volatility and the performance of broader indices.

LINK TO CHART – https://schrts.co/XBSDuVTj

 

ENGH.TO – Enghouse Systems Ltd.

Enghouse Systems appears to be attempting a breakout from a bottoming wedge.

LINK TO CHART – https://schrts.co/nAMMKSUS

 

T.TO – TELUS Corp.

TELUS is setting up on the right side of a bottoming pattern, with the PPO moving higher from the zero line. Monitor for any potential breakout signals.

LINK TO CHART – https://schrts.co/uXSXDiRc

 

TD.TO – Toronto-Dominion Bank

Toronto-Dominion Bank is set up on the right side of a significant multi-year consolidation/continuation pattern, with the PPO moving above zero. Monitor for any signs of upside momentum.

LINK TO CHART – https://schrts.co/txCGgYPZ

 

TOI.V – Topicus.com Inc.

Topicus is demonstrating relative strength as price action attempts to reach another new high.

LINK TO CHART – https://schrts.co/IpkzCBqu

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.

EXPORT – US Watchlist Scan – 2024-09-07

ABT, AGX, ALC, AMRK, AMT, ATAT, ATR, BAX, BLDR, BLX, BRC, BSX, CAG, CARR, CB, CBOE, CCI, CHWY, CME, COO, CORT, CPB, CRH, CTVA, DG, DHI, DHR, DOCS, DOCU, DT, DVA, EBAY, EDR, EPAM, ERIE, ESEA, ESQ, EVH, FIHL, FRHC, GIS, GPK, GSK, GWRE, HOLX, HRL, HSY, IFF, IOT, IT, ITB, ITCI, KVUE, LEN, MCD, MDLZ, MDT, MHO, MNST, MTH, O, PATK, PG, PHM, PLTR, PM, PPL, PRCT, PSA, RELX, RMD, RPM, RYTM, SBAC, SHW, SKT, SKYW, SMAR, SOLV, SPG, STE, STZ, SYK, T, TFX, TMHC, TMO, TOL, TRNO, TRV, TSN, TVTX, TZOO, UAL, UNH, V, VTR, WELL, WY, ZTS

 

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 – 2024-09-07

ALA.TO, ARR.TO, ASCU.TO, ASE.CA, ASTL.TO, ATD.TO, ATD/A.TO, ATX.V, BGI/UN.TO, BNS.TO, CAR/UN.TO, CCL/B.TO, CNC.V, CPX.TO, CRR/UN.TO, CSH/UN.TO, DFY.TO, ENB.TO, ENGH.TO, EQB.TO, ETG.TO, FFN/PA.TO, GIB/A.TO, GIL.TO, GRA.TO, GWO.TO, HAI.TO, HME.V, HMR.V, KEY.TO, KLD.V, KMP/UN.TO, KSI.TO, MND.TO, NWC.TO, NXR/UN.TO, PLZ/UN.TO, PPL.TO, PRB.TO, PRV/UN.TO, PTO/UN.TO, QBR/B.TO, RSI.TO, SIA.TO, SIS.TO, T.TO, TA.TO, TD.TO, TOI.V, TRP.TO, TUO.V, VNP.TO, WILD.TO, ZDC.V

 

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