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: The sector watchlists are updated every weekend. You may want to consider dedicating time to reviewing and creating your watchlist. Also, it’s essential to keep an eye on the Daily Setups and Workspace scan results, which can provide insights into 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 us via email 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
Market Commentary
Friday’s job report shook the markets, but resilience prevailed. Over the past few days, the behavior of stocks has exhibited a characteristic pattern, indicative of exhaustion in selling pressure, as many charts became oversold. Weak openings have consistently given way to strong closings, often near the day’s highs. Friday’s trading session further strengthens the case for this interpretation, as it featured a pronounced selloff in the aftermath of the jobs report release, swiftly followed by a substantial and noteworthy reversal.
The Labor Department’s Friday announcement revealed that US employers had added 336,000 jobs in September, marking the highest job gain since January. Initially, this news sent shockwaves through the financial markets, momentarily propelling bond yields to their loftiest perch in 16 years.
However, the resilience of the financial markets quickly came to the forefront. As Treasury yields retreated from their peak and stock values rebounded, investors began to dissect the data and make sense of the underlying dynamics. Their consensus was that the report continued a recent pattern of decelerating wage growth. This development carries significant implications because it counters a string of robust economic indicators that had confounded Wall Street in recent months.
The question of whether the Federal Reserve’s interest rate hikes have concluded and the anticipated duration of restrictive rates has been central to investor sentiment. The robust job report and subdued wage growth rekindled these deliberations in this context.
The S&P 500, emblematic of US market resilience, surged by 1.2% despite its recent tumultuous performance. The price action experienced a significant upswing, rallying decisively beyond the previously highlighted consolidation area and establishing itself above the critical 200-day moving average, an aspect diligently emphasized in our daily reports. Notably, this impressive surge was momentarily halted just below the resistance line, once a vital support level before its breach.
S&P 500 – Daily Chart
The index managed to eke out a 0.5% weekly gain, effectively snapping a four-week losing streak. Yet, it still languishes at a 6% distance from its peak in July, trimming its annual gains to a more modest 12%. The weekly chart provides a comprehensive overview, showcasing the prominent support and resistance levels and potential trigger lines.
S&P 500 – Weekly Chart
With unwavering determination, the Nasdaq Composite defied adversity, forging a triumphant path out of negative terrain during the week’s final session, ultimately achieving a substantial gain of 1.6% as price action rebounded off the lower trendline of its pattern.
Nasdaq – Daily Chart
Remarkably, the index concluded the week near its peak and registered an impressive 1.6% increase for the entire week. As we stand on the cusp of 2024, the Nasdaq Composite has soared by a staggering 29% year-to-date, a testament to its remarkable performance in the current year.
Nasdaq – Weekly Chart
This upward momentum occurred even as Treasury yields experienced an upward jolt. The 10-year yield leaped by eight basis points to nearly a daunting 4.90%, albeit later retracing some gains.
10-Year US Treasury Yield – Daily Chart
10-Year US Treasury Yield – Weekly Chart
Similarly, the two-year yield saw a six basis point climb to an imposing 5.08%. The long end of the yield curve, 30-year yields, exhibited a surge above 5%, a level not witnessed since 2007, subsequently receding to a still formidable 4.95%.
Bond Yields
However, the yield curve inversion persistence remains a significant headwind for equities. There are preliminary indications of a potential short-term shift in sector preferences, as Friday hinted at signs of sector rotation.
Numerous of our leading stocks also flashed technical signals as I sent out a second report on Friday, with technology and communication services sectors demonstrating strength and vying for outperformance against the erstwhile leader, the energy sector.
Ratio Chart Plotting the Outperformance of Technology Versus Energy
In contrast, the consumer staples sector languished as concerns loomed over the enduring inflationary climate, causing stocks of retail giants like Walmart and Costco to dip more than 1.5%.
Below, we present an overview of the Green Light – Red Light system, inspired by the SSI, which combines market breadth with advancing and declining volume. This system serves as a valuable tool for pinpointing short-term shifts in trends.
Market Breadth Green Light – Red Light System
The small-cap Russell 2000 descended to a five-month low on Tuesday, subsequently witnessing a marked 2.1% decline. In the current scenario, price action seems to be tiptoeing along the lower support, evoking the imagery of a cautious walk on a plank.
Russell 2000 (ETF) – Weekly Chart
The TSX Composite, having momentarily breached the lower support line of its trading range, successfully regained its footing by the close of the trading day. Nevertheless, it continues to hold on by a thread to this pivotal support level.
TSX – Weekly Chart
The US dollar witnessed a notable sell-off over the last three days, marking the end of the trading week with a resounding exclamation point on the weekly chart, printing a topping candle. The greenback retreated by 0.26% on Friday, settling at 105.78.
This reversal in fortunes arrives after a prolonged period of robust dollar strength, largely attributed to the tumultuous waves roiling the bond market. As yields soared to multi-year highs, the greenback surfed a powerful tide of appreciation. However, this week’s performance marked a pivotal shift. This move threatens to terminate an impressive 11-week streak, a meteoric ascent that has seen the dollar index soar by approximately 6%.
US Dollar – Weekly Chart
When the US dollar strengthens, it often exerts downward pressure on stock prices, leading to major indices like the S&P 500 declines. This occurs because a stronger dollar makes US exports more expensive for foreign buyers, which can hurt the profitability of US multinational companies. In response, investors may shift their capital away from stocks and into the appreciating currency.
Conversely, stock markets often see an uptick when the US dollar weakens or reverses lower. A weaker dollar can make US exports more competitive on the global stage, potentially boosting the earnings of multinational corporations. As a result, investors may become more inclined to invest in stocks, leading to upward movements in stock prices.
This intricate dance between the US dollar and stock markets is a notable feature of the financial landscape, where currency fluctuations can significantly impact investment strategies and market dynamics, as the chart shows below.
US Dollar/S&P 500 – Inverse Correlation
Gold prices staged a robust rebound on Friday, clawing back ground from the depths of extreme oversold territory. This resurgence in the precious metal’s value coincided with the US dollar, which closed the week with a topping candle.
Gold – Daily Chart
The recent breakdown in the established pattern on the gold chart can be primarily attributed to the formidable performance of the US dollar. Given that gold is predominantly priced in US dollars on major global trading platforms, the sustained strength of the dollar against other major currencies was making gold relatively more expensive for foreign investors. The chart below aptly illustrates the inverse correlation between the price of gold and the US dollar.
US Dollar/Gold – Inverse Correlation
The Japanese Yen (JPY) showed signs of softening, hovering near the 149 mark, as the US 10-year Treasury yield saw an uptick. Meanwhile, the Euro (EUR) has made gains, extending to 1.059. Notably, the key short-term barrier for the EUR stands at 1.0617, which was last Friday’s high. Overcoming this level will be crucial for the EUR to advance towards the 1.0650/1.0750 range. The support level remains steady at 1.0530.
Sterling (GBP) exhibited moderate strength on Friday, emerging as one of the stronger major currencies for the week, with the spot rate regaining the 1.22 level. On the Canadian Dollar (CAD) front, resistance stands at 1.3785.
Currencies
The horizontal resistance line at 290.29 on the CRB index, as previously highlighted in our weekend report, has indeed proven to be a recent peak. Following a retreat in oil prices, the CRB index experienced a pullback last weekend, and it is currently undergoing a test of a crucial support level.
CRB Index – Weekly Chart
The price of crude oil witnessed a sharp and abrupt pullback last week, which has played a role in the ongoing sector rotation we are observing. Notably, some of our top technology chart setups have been surging higher, capitalizing on this rotation, while several energy-related charts have slipped below their moving averages, triggering stop-loss orders. In a manner similar to the CRB index, crude oil is currently undergoing a test of a significant support line. This dynamic highlights the volatility and changing landscape as we witness the potential impact of sector rotation.
Crude Oil – Weekly Chart
One wild card on the horizon is the spreading of geopolitical tensions throughout the Middle East, which has the potential to send oil prices soaring even higher.
Adding to the complexity of the situation, the US Strategic Petroleum Reserves (SPR) currently hold only 17 days of supply, marking their lowest level in history. This is roughly half of the historical average, which has hovered around ~33 days since 1990.
In a parallel development, OPEC has reaffirmed its commitment to maintaining voluntary production cuts of over 1.5 million barrels per day. This decision comes at a time when Russian exports of crude oil are being curtailed, and the world’s largest oil producers are embroiled in conflict.
Given these factors, it can be argued that there has never been a more precarious moment to have a depleted SPR. The intricacies of the global oil market and the ongoing geopolitical tensions underscore the significance of prudent energy resource management.
Days Left in the Strategic Petroleum Reserve
Natural gas futures achieved their highest levels since the heating season as price action began to ascend decisively from a substantial bottoming pattern, accompanied by a surge in trading volume. This surge came from federal data, which disclosed that domestic inventories had expanded less than analysts had expected in the previous week. This positive development drove prices higher by nearly 14% for the week.
Natural Gas – Daily Chart
The price of copper continues to flirt with the lower trendline, situated at the tight apex of its triangle pattern.
Copper – Weekly Chart
Silver prices continue to thrash around near the apex of a sizable triangle formation.
Silver – Weekly Chart
The uranium theme witnessed a week of pronounced volatility, characterized by the Global X Uranium ETF undergoing a rigorous test of its 50-day moving average. Price action displayed a strong rebound from this level, forming a hammer candle on the weekly chart. The chart clearly delineates the areas of support and resistance.
Uranium Theme – Global X Uranium ETF
As mentioned in the October 4th report, pay special attention to the Bitcoin setup. The price action is tightly squeezed between the moving averages, with the 200-day moving average acting as a strong resistance level. I refer to this type of setup as a coiled spring being compressed by the 200-day moving average. If the price manages to break through, it could unleash significant upward momentum, like a spring-loaded jack-in-the-box once the lid is removed.
Bitcoin – Daily Chart
The weekly chart shows the price of Bitcoin walking higher above an upward-sloping 40-week moving average, with the weekly PPO momentum indicator testing the zero line.
Bitcoin – Weekly Chart
Sector Watchlist Highlights: Weekend Chart Setups
In this segment of the weekly report, we delve into the setup section. As a friendly reminder, our sector watchlists receive updates every weekend. We strongly encourage you to review these updates and craft your own watchlist based on the information provided. It’s also worth highlighting that monitoring the Daily Setups and Workspace scan results can yield valuable insights into potential future additions, potentially giving you a competitive advantage in the market.
This section highlights setups from each watchlist, pinpointing potential momentum opportunities. You will find a link to each sector watchlist for your reference. It’s important to keep in mind that setups may not always be immediately evident, particularly for sectors currently out of favor. This is because sector correlations can shift with changes in overall market sentiment, resulting in weeks when prominent setups may not be readily apparent.
As we reflect on last week’s performance, the chart reinforces the ongoing discussion about potential sector rotation. The technology and communication services sectors displayed notable strength, whereas the energy and staples sectors faced substantial sell-offs.
What Worked Last Week
Canadian Energy
Link – Canadian Energy Watchlist
BDGI.TO – Badger Infrastructure Solutions Ltd.
Badger Infrastructure Solutions is once again making an attempt to trend higher from its continuation pattern.
LINK TO CHART – https://schrts.co/fwmFWhDC
PEY.TO – Peyto Exploration & Development Corp.
Peyto Exploration is set up in the form of a bull flag continuation pattern. Monitor for a potential continuation of the uptrend.
LINK TO CHART – https://schrts.co/mfcydtHv
RBA.TO – Ritchie Bros. Auctioneers Inc.
The setup in Ritchie Bros, which was recently highlighted, is now accelerating higher from the continuation pattern breakout.
LINK TO CHART – https://schrts.co/TbgECjYi
Energy
AR – Antero Resources Corp.
Antero Resources is retesting the bottoming base breakout as the PPO momentum indicator sets up to perform a bullish cross.
LINK TO CHART – https://schrts.co/cXknXeTU
Communication Services
Link – Communication Services Watchlist
GOOGL – Alphabet Inc.
Alphabet continues to maintain its upward-sloping 50-day moving average, with price action now threatening to break out above recent highs.
LINK TO CHART – https://schrts.co/hIdpkMkK
META – Meta Platforms, Inc.
Meta is attempting to breakout from a significant consolidation/continuation pattern.
LINK TO CHART – https://schrts.co/VFMavCzH
Consumer Discretionary
Link – Consumer Discretionary Watchlist
MOD – Modine Manufacturing Co.
Modine Manufacturing is attempting to breakout from a bullish pennant continuation pattern.
LINK TO CHART – https://schrts.co/pPBvAMxB
PETQ – PetIQ, Inc.
PetIQ is exhibiting a significant upward movement as it breaks out from a bull flag continuation pattern, positioned just below its 52-week highs.
LINK TO CHART – https://schrts.co/yqYJQTTY
TNET – TriNet Group, Inc.
TriNet is attempting to trend to a new all-time high.
LINK TO CHART – https://schrts.co/nYSRxpUV
TSLA – Tesla Inc.
Tesla is persistently rising from the lower trendline of the continuation pattern that we’ve been highlighting. Please pay attention to the PPO momentum indicator, which attempts to turn higher from the zero line. Keep a watchful eye out for a potential breakout.
LINK TO CHART – https://schrts.co/VitfXgzm
Financial
CME – CME Group Inc.
CME Group is breaking out to a 52-week high.
LINK TO CHART – https://schrts.co/IvTInyEC
IBKR – Interactive Brokers Group, Inc.
Interactive Brokers appears to have successfully retested the recent breakout in the form of a bull flag continuation pattern or a continuation wedge.
LINK TO CHART – https://schrts.co/rZKktyjJ
TW – Tradeweb Markets Inc.
Tradeweb Markets is attempting to break out from a bull flag continuation pattern.
LINK TO CHART – https://schrts.co/RzdFVSZD
Healthcare
LLY – Eli Lilly & Co.
Eli Lilly is currently making an effort to trend higher from a bull flag continuation pattern.
LINK TO CHART – https://schrts.co/VHdJGUVU
NVO – Novo Nordisk A S
Novo Nordisk is currently setting up just below a trigger line within the context of a bull flag continuation pattern.
LINK TO CHART – https://schrts.co/UNMpIjMW
UNH – Unitedhealth Group, Inc.
Unitedhealth continues to threaten a significant breakout as it consolidates within the confines of a continuation pattern.
LINK TO CHART – https://schrts.co/HkqwnFvt
Industrial
J – Jacobs Engineering Group Inc.
Jacobs Engineering is setting up below 52-week highs. Monitor for a potential breakout.
LINK TO CHART – https://schrts.co/YYxAGTcI
HDSN – Hudson Technologies, Inc.
Hudson Technologies is currently making an effort to trend higher from a bull flag continuation pattern.
LINK TO CHART – https://schrts.co/dyRWXGxw
PCAR – PACCAR, Inc.
PACCAR is currently making an effort to trend higher from the apex of a continuation pattern positioned just below new highs.
LINK TO CHART – https://schrts.co/NCmZcNWh
Semiconductors
Link – Semiconductors Watchlist
AMD – Advanced Micro Devices, Inc.
AMD is making an effort to trend higher from a falling wedge or falling channel continuation pattern. The current price action is encountering resistance from a notable volume by price bar. Keep a close watch for a potential breakout.
LINK TO CHART – https://schrts.co/uByvrTqB
NVDA – NVIDIA Corp.
Nvidia is currently consolidating below a horizontal resistance line. It’s worth noting the large volume by price bar on the left side of the chart, indicating significant accumulation throughout this pattern. Keep a close watch for a continuation of the uptrend.
LINK TO CHART – https://schrts.co/XCIEAcZb
SMH – VanEck Vectors Semiconductor ETF
The VanEck Vectors Semiconductor ETF is making an effort to trend higher from a falling wedge. The current price action is encountering resistance from a notable volume by price bar. Keep a close watch for a potential breakout.
LINK TO CHART – https://schrts.co/NYfkIDfN
Software
BSY – Bentley Systems, Inc.
Bentley Systems continues to show the potential for a breakout.
LINK TO CHART – https://schrts.co/GkQXqZeQ
CDNS – Cadence Design Systems, Inc.
Cadence Design Systems is currently positioning itself on the right side of a significant basing pattern, situated just below new highs.
LINK TO CHART – https://schrts.co/tnIzmNRF
ZS – Zscaler, Inc.
Zscaler continues to set up just below the breakout line. Monitor closely for potential upside momentum.
LINK TO CHART – https://schrts.co/HBzyVpkw
Staples
BRBR – Bellring Brands Inc
Bellring Brands is consolidating in the form of a continuation pattern while the PPO momentum indicator sets up to perform a bullish cross. Monitor for a continuation of the uptrend.
LINK TO CHART – https://schrts.co/aWhNwifS
Technology
ANET – Arista Networks, Inc.
Arista Networks is currently making an effort to trend higher from its basing pattern, positioned just below new all-time highs.
LINK TO CHART – https://schrts.co/KVRRpHNA
PANW – Palo Alto Networks Inc.
Palo Alto Networks is presently consolidating toward the apex of a significant consolidation/continuation pattern, positioned just below new highs. Monitor closely for a potential breakout.
LINK TO CHART – https://schrts.co/EyaDykHP
SMCI – Super Micro Computer, Inc
Super Micro Computer is currently consolidating within the confines of a continuation wedge. Be vigilant for a potential breakout.
LINK TO CHART – https://schrts.co/wcPxgMMz
Conclusion
To conclude our weekend report, we extend our appreciation for your active engagement and the insights shared. This week serves as a prime illustration of the importance of keeping your watchlist prepared with the finest setups, as they tend to gain momentum when the market begins to pivot. Your feedback holds immense value to us, and we welcome your recommendations. We encourage you to stay vigilant and keep an eye on the Daily Setup, the Workspace, and the Watchlists for emerging opportunities. Until our next encounter, happy trading!
