Simple Trading Update For Week Ended 5 February 2016

“The risk of a wrong decision is preferable to the terror of indecision.”

— Maimonides


Equity prices fell once again this past week following a brief respite from the downward movement over the last 2 weeks.  Shockingly enough, some professional brokerage houses think that this presents a tremendous buying opportunity if you’re willing to look beyond the “current market volatility.”  For example, according to the Edward Jones Weekly Update for the week ended 5 February 2016,

“…we think the fundamentals of economic growth remain positive, supporting stocks despite recent volatility. Additionally, owning the appropriate mix of stocks and bonds, based on your comfort with risk and your long-term goals, can help you stay calm and take a longer-term perspective when stocks drop. We recommend you look beyond current market volatility. As many current concerns seem overblown, they’ve created an opportunity to add quality investments at lower prices.”

Please note, “Edward Jones does not provide access to past weekly summaries.”  So if you’re reading this much beyond 5 February 2016, you likely won’t find the quoted language… unless we’ve gone down even more.

At any rate, the Edward Jones statement may be true, but it seems that this will always be the position of brokerage houses given their interest in keeping you in the market and thus your money under their management.  Consequently, theirs is an endorsement with little substance.  It would be far more interesting to me if the company said “we think the current risk is to the downside, so we suggest you head to the sidelines.”  I know… ain’t gonna happen… but still, one can hope no?

A any rate, in keeping with the value of “pictures” versus words, have a look some weekly and quarterly charts.


S&P 500

No interest in a SP-500 long unless price can make it back up above 2060 or so.

SPY Wk Ended 5 Feb 2016



The same with the Dow Jones Industrial Average… don’t look for a long trade below 17,500.

DJIA Wk Ended 5 Feb 2016



The tech sector is in an interesting position… it’s managed to stay close to the century mark on every downward swoon.  That said, if price can make it down through the low from 2 weeks ago, look out…

QQQ Wk Ended 5 Feb 2016



As I’ve said before, oil remains mired in a tremendous downtrend and continues to be the weight hung around the neck of the equities market

OIL W Wk Ended 5 Feb 2016



The quarterly charts look much further back, thus revealing a far more clear picture of the current structure.  Taken as a whole, one would be hard pressed to find that the charts currently suggest the risk is to the upside.

S&P 500

Modest support around 1800, then nothing more until 1580 or so.

SP-500 Q Wk Ended 5 Feb 2016



Similar to the SP-500, support looks pretty far away at just above 14,000.

DJIA Q Wk Ended 5 Feb 2016



Technology looks the healthiest with support at $90 and then more at $85.

QQQ Q Wk Ended 5 Feb 2016



Breaking through the $15 area really made OIL bottomless for the time being.  There will be a good countertrend buy signal eventually… but when is anyone’s guess…

OIL Q Wk Ended 5 Feb 2016



F.A.N.G. aka Facebook, Amazon, Netflix and Alphabet (formerly Google)

FB Weekly

Facebook is still positively structured… but in a bit of trouble here…

FB W Wk Ended 5 Feb 2016


FB Quarterly

FB Q Wk Ended 5 Feb 2016


AMZN Weekly

Amazon broke through TVZ and looks set to head lower.

AMZN W Wk Ended 5 Feb 2016


AMZN Quarterly

AMZN Q Wk Ended 5 Feb 2016


NFLX Weekly

Netflix confirmed its downside breach of TAOST Value Zone and looks prepared to test support down around $69.

NFLX W Wk Ended 5 Feb 2016


NFLX Quarterly

NFLX Q Wk Ended 5 Feb 2016


GOOG Weekly

Alphabet remains positively structured (relative to TAOST Value Zone), but is testing weekly support right here and could easily breach $640 in short order.

GOOG W Wk Ended 5 Feb 2016


GOOG Quarterly

GOOG Q Wk Ended 5 Feb 2016


As always, anything can happen and a surge of buying next week could change the market’s prospects (and thus my opinion) but I wouldn’t count on it.

Hope it helps.


The Trader