A market update from TheArtofSimpleTrading.com. The DJIA fell 1,000 points last week... Other equity indices suffered similar declines. Are we at the end of the multiyear Bull Run?

1. Market Update as of Week
Ending 21 August 2015
AKA -- What The &*^% Happened This Week?

2. US equity markets gave up multiple
percentage points this week...
It looks “bad” (to bulls anyway) but don’t go getting all
emotional just yet. This week’s action doesn’t mean the
monster, multiyear uptrend in equity markets is done. What
follows is a look at select equity and related charts from the
10,000 foot level… also known as the weekly and quarterly
timeframes. As you’ll see, the recent price action in stock
indices is, for the most part, a blip… for now.
With these kinds of trends, I would much rather look to buy
support (on a new breakout to the upside), than try to catch
a big move down… for now.

3. SPY W

4. SPY
The SPY broke multiple weekly support
levels…including that denoted by the horizontal
line. Price finally came to rest at a support
level extending back to the end of
2014/beginning of 2015. As you’ll see on the
quarterly chart that follows, this move barely
registers on the longer term picture. Major
support is all the way back around $158. I
would need price back above the weekly TVZ
before becoming positive again.

5. SPY Q

6. DIA W

7. DIA
The DJIA dropped 1,000 points and looks to have gotten it
worse than SPY due, in part, to being comprised of only 30
stocks. The index broke several levels of weekly support
including the lows of the congestion at the end of
2014/beginning of 2015 along with TAOST Value Zone
(TVZ). The next level of support is around $158 which
aligns with that shown on the quarterly chart below. There
is additional support at $147 and major support lives at
$142 although if price gets to these lower levels the
strength of the trend will be in serious doubt if not
obliterated altogether.

8. DIA Q

9. QQQ W

10. QQQ
The tech sector as represented by the Qs
suffered along with the the overall market.
Price held above at weekly support ($100) and
stopped right at the bottom of the weekly TVZ.
While it’s hard to identify support on the
quarterly chart given the parabolic nature of the
move, $90 and $83 look like consecutive areas
of support. Interestingly, price is finally within
shouting distance of the all time high from
March 2000 ($120.50).

11. QQQ Q

12. MDY W

13. MDY
MDY is the S&P Midcap ETF. It’s also my
favorite index as midcaps are in the sweet spot
in terms of real companies with tremendous
growth potential. The ETF closed just below
the weekly TVZ, but still above support at $252.
There is additional support at $230 and way
down at $185.00 and $169.

14. MDY Q

15. FXI W

16. FXI
I thought it might be good to have a look at an
ETF that represents what’s been called the
origin of all this market mishegas… China.
During a large portion of the runup over the last
6 years China or, more specifically, what was
thought to be the endless growth potential of
China was the fuel for combustion. We’re now
seeing the other side. Support around $28 and
$19. Below that? Trouble.

17. FXI Q

18. JNK W

19. JNK
In a strong market you’ll generally see high and
rising interest in High Yield corporate securities
(aka “junk bonds”) as investors feel more
comfortable about the capacity of overall
growth to help companies service the debt
load. A nervous market gives you just the
opposite. Here, the weekly looks nasty, but on
the next slide, the quarterly shows that price is
only approaching the bottom of a channel
extending back to 2010.

20. JNK Q

21. GLD W

22. GLD
I’ve been negative (and right) on the price of
GLD since early 2013 during that time there
have been several strong bounces, but none
that reversed the trend. There’s no reason to
expect any different here… except maybe that
we have now retraced a bit more than half of
the move up that began in 2005. Could go
either way here… watch $117.50 in the coming
weeks… if price can clear that and hold, there’s
a shot that a reversal will take root.

23. GLD Q

24. USO W

25. USO
There is a good long trade coming in oil at
some point. It’s a cyclical commodity and we
are working through a global glut at the
moment. Trader/analyst (and long time oil
bear) Dennis Gartman feels like the bottom is in
and took a shot on the long side on Friday. I’ve
been saying since January of this year that
weekly long setups should be taken (and I
made 2 calls to that effect here and here). I
see no reason to change that opinion.

26. USO Q

27. VIX W

28. VIX
I have never thought the Volatility Index a great
indicator for traders (the mere presence of
volatility is not negative), but traders continue to
watch it and use it, so when in Paris… The Vix
spiked last week (almost 50% on Friday alone)
but it did so off of ongoing historic lows. Some
are suggesting this spike is going to turn the
overall market lower. That may be (it looks
similar to 2007), but it could also be a great
buying opportunity.

29. VIX Q

30. EUR/USD W

31. EUR/USD
The Euro caught a bid recently due in part to
the craziness in other, more tertiary currencies.
Pattern wise, it looks like what I call a Dead
Man’s Drift. Price makes a hard push down
then begins to drift higher forming what looks
like a wedge. The pattern is confirmed when
price breaks back down through the rising
trendline along its bottom. The quarterly shows
that price could drift as high as 1.20 and still
maintain its integrity.

32. EUR/USD Q

33. TNX-X W

34. TNX-X
Used by traders to gauge the level of interest
rates, the TNX-X loosely reflects the current
rate for the 10 year, but the direction is more
important and telling. With a likely September
rate hike by the Fed, one would think that rates
would be trending strongly higher. Last week
suggests otherwise. Likewise the quarterly tells
us that the rate needs to get and remain above
3% ($30) before the back of this long
downtrend is broken.

35. TNX-X Q

36. % Stocks Above 200 Moving Avg W

37. % Stocks Above 200 Moving Avg
Finally, a look at another trader favorite. The
200 Day Moving Average is watched on
virtually every stock by traders, thus making it
important. At only 25.5% (and looking set to go
lower), things don’t look good for bulls.

38. % Stocks Above 200 Moving Avg Q

39. A Couple Of Fan
Favorites

40. BBH W

41. BBH
The Biotech Sector has been in a love affair
with the investing public for several years now.
While the ETF’s price has pulled back along
with the broader market, it hasn’t suffered
nearly as much… in fact, this looks a lot like a
buying opportunity. Support at $122.87,
$119.76 and $113.87.

42. BBH Q

43. GOOGL W

44. GOOGL
Price is powerfully structured to the upside on
GOOGL on both the Weekly and Quarterly
timeframes. In fact, the quarterly shows the
stock having just broken out of a Bull Flag. To
the downside, there’s good support at the
$614.50, $609 and $585 levels.

45. GOOGL Q

46. AAPL W

47. AAPL
AAPL is the favorite whipping target of the
market du jour… just as it was a darling on the
way up… $104.63, $100.75 and $97.79 are
good support levels.

48. AAPL Q

49. Conclusion
The talking heads will be lamenting and
wringing their hands this weekend… “the end is
nigh” they’ll say. Maybe… but this could also
be setting up a great buying opportunity.
Either way, don’t try to predict… stick to your
strategy and trade your setups. The result will
take care of itself.
KIS,
The Trader