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.

SYS Daily Report – Weekend Edition

Equities

In a week filled with turbulence, the stock market faced a significant correction characterized by substantial losses. This abrupt downturn was primarily sparked by a rapid and pronounced surge in 10-year Treasury yields, a direct response to the recent Federal Reserve meeting’s outcomes.

Within this tumultuous environment, the S&P 500 index found itself breaching the lower boundary of its triangular pattern. Despite initial optimism and efforts at renewed strength throughout the week, Friday’s trading session offered no signs of recovery, leaving investors in a state of uncertainty.

This scenario vividly illustrates the intricate interplay between interest rates and equity markets, underscoring the challenges posed by evolving macroeconomic conditions. As we look ahead, it becomes imperative to closely monitor developments in both bond yields and stock prices, recognizing their pivotal roles in shaping the market’s trajectory.

The S&P 500 confronted a challenging descent, culminating in a 0.2% decline on Friday. This downward trajectory led to a 2.9% weekly loss, marking its most significant decline since March and the third consecutive weekly downturn. The Nasdaq Composite mirrored these woes, shedding 0.1% on Friday and tallying its third successive week of losses, with a substantial 3.6% decline, notably affecting tech shares. The Dow Jones Industrial Average, in line with the broader trend, concluded Friday 0.3% lower, contributing to a 1.9% weekly decline. Among small-cap equities, the Russell 2000 bore the brunt of the storm, sliding by 3.8% over the week.

Amidst the backdrop of surging yields, the US dollar maintains its remarkable streak of weekly gains, with Friday serving as no exception. As the stock market navigates the intricacies of correction territory, discerning investors are instinctively moderating their risk appetite. Data from LSEG Lipper reinforces this caution, revealing that US investors have assumed a prudent stance, emerging as net sellers of mutual funds and exchange-traded funds throughout the week. This shift in sentiment has led to substantial withdrawals, totaling $16.8 billion by the close of trading on Wednesday.

S&P 500: Charting Uncharted Waters as Support Lines Crumble

The S&P 500 index boldly entered uncharted territory as it descended beneath the lower boundary of its triangular pattern, signaling caution with a red light.

S&P 500 Weekly Chart: Cracks Emerge as the Mighty Support Line Bows

The S&P 500’s weekly chart underscores a breach of the significant support line, accompanied by a notable volume by price bar on the left side of the chart. This volume by price bar suggests that the price is now positioned below a region of major overhead resistance.

NASDAQ 100 Daily Chart: Holding Lower Trendline and Support by a Thread

On the daily Nasdaq 100 chart, Friday closed with a faint glimmer of green. However, the lower trendline clings on by a thread, signaling a precarious balance. Caution is the watchword as the market navigates uncertain terrain.

NASDAQ 100 Weekly Chart: Balancing Act on the Precipice of Crucial Support

The Nasdaq 100 weekly chart shows a high-stakes balancing act unfolding, with price precariously perched at the edge of crucial support. Investors should tread cautiously, as a decisive move below this pivotal level could usher in a formidable bearish sentiment.

Russell 2000: Navigating Turbulence Amidst Looming Threats at Critical Trendline

The Russell 2000’s recent performance has been undeniably ugly, with price action now perched upon the lower trendline of a consolidation zone and horizontal support. This juncture marks a critical technical ‘line in the sand,’ influencing the market’s short-term path and broader sentiment.

TSX Price Action: The Apex Duel Between Bulls and Bears

Price action on the TSX chart resembles a fierce duel, with sharp fluctuations between the upper and lower trendlines, culminating in a tightening apex. This formation signifies a crucial juncture where the market’s next move is in question. As adherents to the Chartered Market Technician (CMT) doctrine, we remain vigilant for the eventual directional breakout, guided by the principle of reacting to price movements rather than speculative forecasts.

Currencies

In the FX arena, the USD stands resolute, trading near Thursday’s high, poised to secure an impressive tenth consecutive weekly gain. Following the Federal Reserve’s decision on Wednesday, US yields have surged to new cycle highs, sustaining levels surpassing those observed in 2023.

Meanwhile, the JPYUSD has witnessed a depreciation as the Bank of Japan chose to maintain its current policy, signaling no imminent rate adjustments. In the EURUSD pair, the euro maintains a precarious position, hovering around the critical 1.06 support zone. GBPUSD, on the other hand, has faced pressure following the Bank of England’s decision to maintain unaltered interest rates.

Across the Atlantic, the CADUSD exhibits resilience, maintaining a slight advantage over the USD despite the latter’s overall strength in recent sessions.

US Dollar’s Show of Strength: Breaking Barriers as It Eyes the Next Summit

The US dollar’s remarkable achievement of clinching its 10th consecutive week of gains stands as its longest winning streak in nearly a decade. It has completed its first ‘golden cross,’ with the 10-week moving average crossing above the 40-week moving average since July 2021. This milestone could signal further upward momentum for the greenback, potentially compounding challenges for stocks as it aims for the next summit. If it effectively breaches current resistance levels, the US dollar may persist as an enduring headwind for stocks, with repercussions for the earnings of US companies conducting business overseas.

The Intriguing Tango: US Dollar and S&P 500’s Opposite Moves

Bonds

Bond Yield Resilience: A Stronghold Paving the Path to Market Volatility

Treasury yields closed the week at levels not seen since 2006, marking their third consecutive week of gains as the Federal Reserve commits to a prolonged period of higher interest rates.

The 2-year Treasury yield, reaching its highest close since July 2006, saw a weekly increase of 9.3 basis points. The 10-year yield, hitting its highest point since October 2007, climbed by 11.7 basis points over the week. Meanwhile, the 30-year yield, reaching its highest level since April 2011, rose by 11.1 basis points.

This surge in yields incentivized investors to shift towards cash and away from riskier assets, resulting in declines in stock indexes. Looking ahead, as the bond market anticipates increased supply and the Fed maintains its stance on higher interest rates, upward pressure on yields is likely to persist, affecting various asset classes.

10-Year Treasury Yield’s Thunderous Rally: Scaling Heights Unseen Since 2007

The 10-year Treasury yield surged by 12 basis points, reaching 4.44%. It had previously climbed to 4.49% on Thursday, a level not seen since October 2007. This move in yields has led to a breakout in price action, surpassing all recent resistance levels and acting as a major headwind for equities. The chart’s significance is such that it could be a noteworthy inclusion in a textbook.

Commodities

Uranium stocks maintained impressive momentum, supported by a successful retest of the 21-day exponential moving average. Meanwhile, uranium prices surged to remarkable heights, breaking free from Earth’s gravitational pull and achieving escape velocity. The latest price surge of $3.25 pushed uranium prices to $70.50 per pound, with sellers even seeking as much as $72.

In contrast, the price of gold remained relatively stable, showing only a marginal decline of 0.03% to settle at $1944.60. Silver, on the other hand, experienced a noteworthy gain of 1.96%, closing the week at $23.84. Copper saw a moderate decline of 2.76%, ending the week at $3.70.

Light crude oil had a comparatively steady week, with a modest 0.1% increase, closing at $90.03. In contrast, natural gas experienced a substantial surge, rising by 8.89% to $2.88. Lumber, however, faced a dip of 3.28%, closing at $482.70.

Overall, the CRB Commodities Index recorded a 1.25% decrease, concluding the week at 285.99.

CRB Index Retreats: Seeking Support Near the Moving Averages

The CRB index continues to display signs of relative outperformance compared to the S&P 500 benchmark, even after closing lower for the week.

Crude Oil Weekly Chart: The Doji Candle Signals Market Indecision at Close

The Crude Oil weekly chart presents a noteworthy pattern with a prominent doji candlestick at the recent close. This doji signals a significant level of market indecision and suggests a tug-of-war between buyers and sellers. It reflects uncertainty regarding the future direction of oil prices.

Investors should closely monitor this development in the coming week, as it often serves as a precursor to potential reversals or significant price movements. The dojo’s positioning and size within the overall trend can offer valuable insights into the market’s sentiment.

It’s essential to watch for follow-up price action in the next trading sessions to gauge whether this doji is a turning point or merely a brief pause in the prevailing trend. Traders should look for confirmation signals or additional cues to make informed decisions in the oil market.

Copper’s Balancing Act: Teetering on the Edge of the Lower Triangle Trendline

Copper’s recent price action presents a fascinating scenario as it delicately balances on the edge of the lower trendline within a tightly drawn triangle apex. This pattern resembles a high-stakes balancing act where the price is under pressure to choose its next move carefully.

Investors should pay close attention to this critical juncture, which often signifies an imminent breakout or significant price movement. The proximity of the price to the lower trendline suggests that a decision point is rapidly approaching.

While this setup can be seen as a potential set up for a directional move, it’s essential to exercise caution and wait for further confirmation before taking decisive action. Keep an eye on price movements, volume, and any external catalysts that could influence copper’s next move, as they will be key in determining whether the metal continues to teeter on the edge or finds its footing in a new direction.

Gold’s Sparkling Allure: Outshining the S&P 500 as Price Action Nears Triangle Apex

The potential sector theme that emerged last week in the precious metals market encountered a setback when price action was decisively rejected by the horizontal resistance line, as indicated on the charts. If you’ve been following our daily reports, you may have noticed that price action in many of the minor assets was perfectly halted by either the upper trendline of a pattern or a significant moving average following the Federal Reserve Chairman’s speech. However, it’s important to note that just because it paused doesn’t mean the potential has vanished.

For instance, consider the price of gold; its price action is currently consolidating above an upward-sloping 200-day moving average and positioned at the apex of a continuation pattern. Furthermore, it’s supported by large volume by price bars, indicating significant accumulation in this region. What particularly piques our interest is its performance relative to the S&P 500, which is breaking out, as evidenced in the indicator at the top of the chart. This is crucial because fund managers often gravitate toward areas that are outperforming. The relative strength indicator is now signaling a breakout in performance against the S&P 500. Consequently, we should closely monitor the technical pattern to see if there’s a price breakout on the horizon.

Silver Shines Amidst Market Volatility, With an Eye on a Potential Apex Setup

The price of silver closed the week on a positive note, showcasing relative and absolute strength amidst market volatility. Price action is currently poised near the apex of a consolidation triangle, a pattern that often signals a directional breakout on the horizon. Silver’s price is closely linked to that of gold, making it essential to monitor for any signs of upside momentum that could potentially lead to a breakout.

Uranium’s Radiant Run: A Continual Glowing Trend

Last week’s report accurately suggested the first signs of exhaustion in the uranium, marking the first instance of fatigue since the trade was initially identified in July. This observation proved correct as price action pulled back and consolidated throughout the week.

During Friday morning’s analysis in the Workspace, we observed that uranium charts were displaying renewed momentum, with prices rebounding from a bull flag retest of the 21-day exponential moving average. Currently, price action is positioning itself below trigger lines on all of the charts, indicating a potential setup for further movement.

For further insights, please refer to the Friday report, where we delved into various uranium charts. Additionally, take note of the volume pattern exhibited by the Global X Uranium ETF. This pattern profile aligns with the formation and breakout of a triangle. It involves a strong volume surge during the initial advance, a decrease in volume as the pattern takes shape, and finally, an increase in volume upon the breakout.

Now is the time to monitor the continuation of the uptrend closely, define downside risk, and capture any emerging momentum.

Crypto Currencies

Bitcoin on the Edge: Navigating the 200-Day Moving Average

Bitcoin finds itself at an intriguing juncture on the chart, with price action hovering above the 200-day moving average while the weekly PPO indicator undergoes a crucial test of the zero line. Keep a close eye on this setup for confirmation of a potential directional move.

What Worked Last Week (What Didn’t Work Last Week: The Flip Side of Success)

The title succinctly captures the essence of last week’s performance analysis. There were no discernible signs of sector rotation, as every sector will often experience a correlation to 1 during the market a sell-off.

Sector Watchlist Highlights: Weekend Chart Setups

Conclusion

In these tumultuous times, the prudent course of action lies in exercising caution and refraining from initiating new positions. Attempting to forecast market direction or swimming against the current trend is a risky endeavor. Instead, embrace a posture of preparedness, aligning with the CMT doctrine, which underscores the importance of reacting to price movements rather than indulging in speculative prognostications.

The recent days have borne witness to substantial selling pressure, accentuated by the triggering of stop-loss orders as prices dipped below moving averages. This underscores the paramount importance of adopting a cautious approach. Many investors now find themselves with a significant portion of their portfolios in cash, thanks to the activation of these stop-loss orders amid the heavy selling. While market dynamics may eventually herald a resurgence, our focus should remain steadfastly on building our watchlists.

As highlighted in Tuesday’s report, “As another trading day draws to a close, the market continues its sideways dance. The question on every investor’s mind: ‘What lies ahead?’ All eyes are on tomorrow’s Fed meeting, a day that tests our patience and reminds us that sometimes, the wisest course of action is to sit tight and let the market reveal its intentions. It’s a day to sit back, grab a bucket of popcorn, and watch others attempt to predict volatility.” The entire week unfolded as one that called for restraint, compelling us to observe from the sidelines while others scrambled for direction.

Typically, this segment of our weekly report showcases setups from our watchlists that exhibit potential momentum. However, the current landscape warrants a different approach as we await further clarity from the market and avoid standing in the path of selling pressure, akin to “trying to pick up pennies in front of a steamroller.”

We urge you to remember that our sector watchlists receive a comprehensive update every weekend, offering invaluable insights to help you construct your watchlist. Additionally, keep a close watch on the Daily Setups and Workspace scan results, as they may unveil opportunities that can provide a competitive edge in the market. Pay special attention to the daily setups, as there is the potential for an ongoing uptrend in uranium stocks, and we are still in anticipation of a definitive directional move in the precious metals.

On another note, I made updates to the website over the weekend to enhance its navigational ease. We kindly request you to take a moment to explore it and provide your feedback. We wholeheartedly welcome all suggestions and greatly appreciate your valuable input.

With this, we conclude our weekend report, expressing our gratitude for your engagement and insights. Your feedback is invaluable, and we encourage you to share your recommendations. Stay vigilant and keep a close eye on the Daily Setup, Workspace, and Watchlists for emerging opportunities. Until next time, may your trades be prosperous and your strategies resilient!