Please Note: Blog posts are not selected, edited or screened by Seeking Alpha editors.

Today's Technical Outlook - 7/21/2017

Summary

Major Economic Reports Today No major reports scheduled Options Expire

Market Summary David Chojnacki – Market Technician, StreetOne Technical Analysis

Good Claims Numbers and Leading Indicators  Reports helped move equities higher at the Market open on Thursday.  The major averages then traded in a narrow range for most of the session.   The major indices were mixed and little changed at the close.  A small gain in the NDX had it up for the 10th straight session as it made new highs.   The DJIA and SPX ended slightly lower by the final bell, keeping the SPX from making a new closing high for the third straight session.  It did hit a new intra-day high.  At the close, the DJIA fell 28.9 points, the SPX inched down 0.38 of a point, and the NDX added 5 points.   Breadth was only slightly positive, on average volume.   ROC(10)’s were higher for all three major indices, as they remained in positive territory.   RSI’s were mixed in the session, with the SPX continuing to lead at 66.8.  The DJIA was lower at 61.5 and the NDX ended at 66.  All three MACD’s continue to remain above signal.  The ARMS index ended the day at 1.33, a slightly bearish reading.   The NDX lead the way Thursday, with a new closing high of 5921 and an intraday high of 5932. Its 20D-SMA is attempting cross back above its 50D-SMA, as they both sit at 5747.  As noted earlier, big Tech pushed the NDX to its 10th straight gain.  The DJIA found resistance just below its top Bollinger Band in the session at 21661.  It remains comfortably above its 20D-SMA of 21464.  The SPX met resistance just above its top Bollinger band of 2474.  It traded as high as 2477.  It has support at its 20D-SMA of 2439.  IWM(iShares Russell 2000) made a new closing high at 143.20 for the second day in a row. IWM new highs indicate the broadness of the recent rally.  The VIX fell 2.1% to finish at 9.58.  Near term support for the NDX is at 5900 and 5875. Near term resistance is at 5922, 5925 and 5950. Near term support for the SPX is at 2462 and 2450. Near term resistance is at 2475 and 2488.  Europe is moderately lower in early trade.  US Futures are mixed in the pre-market.     

DISCLAIMER LANGUAGE -ALL PRICES NOTED IN THIS PUBLICATION ARE AS OF THE CLOSE ON TRADING PRIOR TO

TODAY’S DATE, UNLESS OTHERWISE INDICATED

This publication is neither an offer to sell nor a solicitation to buy any securities mentioned herein. The information contained herein is based on data obtained from recognized sources that are believed to be reliable. Street One Financial LLC (S1F) have not independently verified the facts, assumptions and estimates contained in this publication.

 

Accordingly, no representation or warranty, expressed or implied, is made as to, and no reliance should be placed on, the fairness, accuracy, completeness or correctness of the information and opinions contained in this publication. The information contained in this publication is not and does not purport to be a complete analysis of every material fact respecting any company, industry, ETF or other security You should consider the investment objectives, risks, and charges and expenses of the Fund carefully before investing. The performance data quoted represents past performance. Past performance does not guarantee future results. The Fund’s investment return and principal value will fluctuate. Upon redemption, shares may be worth more or less than their original cost. The Fund’s current performance may be lower or higher than the performance data quoted. Go to toll free telephone number or Web site to obtain performance current to the most recent month-end. The average annualized total returns reflect the deduction of the Fund’s maximum sales load. (When also showing non-standardized performance, if the sales load is not reflected, the disclosure must state that performance does not reflect the deduction of loads or fees and, if reflected, would have reduced performance.)

You should read the prospectus carefully before investing. You should consider the investment objectives, risks, and charges and expenses of the Fund carefully before investing.

Many of the securities mentioned in this publication involve a higher degree of risk and more volatility than the securities of more established securities. For these and other reasons, the investments discussed in this publication may be unsuitable for investors depending on their specific investment objectives and financial position.  Each investor should complete his or her own additional investigation and assessment prior to making investments in any securities. You should consider the investment objectives, risks, and charges and expenses of the Fund carefully before investing Transactions in securities mentioned herein may be affected only in those states where such securities are qualified for sale.

Street One Technical Analysis LLC is an independently owned Company from Street One Financial LLC (S1F). S1F is an independent Company specializing in ETF’s, equities, and options utilizing the Broker/Dealer services and licenses of Precision Securities,LLC, a fully registered Broker Dealer and member of SIPC/FINRA. S1F specializes in agency ETF/ETP, equities, and options trade execution. On the ETF/ETP end, S1F may work with the ETF issuers to understand their products more thoroughly and how they can complement an investor's portfolio.

Data sources include ETF Database, ETFTrends.com, IndexUniverse.com, Google Finance, and Bloomberg data and at times other data sources are utilized. Leveraged, Inverse & Leveraged Inverse Conclusions and Risks 1) Leveraged, Inverse, and Leveraged Inverse (L&LI) ETFs generally capture a high percentage of their expected daily returns, particularly on a net asset value basis. 2) L&LI ETFs are not appropriate for all investors. However, we believe they can be appropriate tools for some investors looking to make short-term tactical trades if they perceive a high likelihood of a strong market move occurring in a relatively short time period. In strong trending markets, being on the right side of the “trade” with L or LI ETFs can lead to very strong returns. 3) Investors should not expect these ETFs to deliver total returns linked to their benchmarks over any period other than daily. The effects of compounding and the daily re-leveraging or de-leveraging that occurs with L&LI

ETFs can lead to unexpected results over the long term. As a result, we believe longer-term investors should consider regularly rebalancing positions. 4) Trendless markets, particularly those with a high level of volatility, can lead to substantial relative underperformance of L&LI ETFs. 2) Leveraged and Leveraged Inverse (L&LI) ETFs typically utilize futures and equity swap agreements. The use of these derivative instruments increases risk and enhances the possibility of tracking error.

 

Relative to traditional ETFs, leveraged, inverse and leveraged inverse ETFs typically have higher costs and lower tax efficiency. 3) The effects of compounding can lead to significant deviations from traditional benchmarks over longer time periods. For example, if $100,000 is invested in an index that increases in value by 10% on day one and then decreases in value by 10% on day two, the investment will be worth $110,000 at the end of day one and $99,000 after day two. However, the value of a security that doubles the daily performance of the index would be worth $120,000 on day one and $96,000 after day two. Thus, the index is down 1% after two days, a doubling of which would be down 2%. However, the security attempting to double the return of the index is down 4%. Investors should consider carefully the potential impact over longer periods. MLP and MLP ETF Risks Individual MLPs are publicly traded partnerships that have unique risks related to their structure. These include, but are not limited to, their reliance on the capital markets to fund growth, adverse ruling on the current tax treatment of distributions (typically mostly tax deferred), and commodity volume risk.

 For tax purposes, MLP ETFs are taxed as C corporations and will be obligated to pay federal and state corporate income taxes on their taxable income, unlike traditional ETFs, which are structured as registered investment companies. These ETFs are likely to exhibit tracking error relative to their index as a result of accounting for deferred tax assets or liabilities (see funds’ prospectuses). The potential tax benefits from investing in MLPs depend on their being treated as partnerships for federal income tax purposes and, if the MLP is deemed to be a corporation, then its income would be subject to federal taxation at the entity level, reducing the amount of cash available for distribution to the fund which could result in a reduction of the fund’s value. MLP funds accrue deferred income taxes for future tax liabilities associated with the portion of MLP distributions considered to be a tax-deferred return of capital and for any net operating gains as well as capital appreciation of its investments; this deferred tax liability is reflected in the daily NAV; and, as a result, the MLP fund’s after-tax performance could differ significantly from the underlying assets even if the pre-tax performance is closely tracked. Commodity ETF Risks Commodity ETFs may be subject to greater volatility than traditional ETFs and can be affected by increased volatility of commodities prices or indexes as well as changes in supply-and-demand relationships, interest rates, monetary and other governmental policies, or factors affecting a particular sector or commodity. Currency ETF Risks Investments in currency involve additional special risks, such as credit risk and interest rate fluctuations.  ETFs mentioned at times may have material exposure to small cap and/or international securities that may have higher levels of risk and volatility than other ETFs.

Registered Representative of and Securities Products offered through Precision Securities, LLC Member FINRA SIPC. Street One Financial LLC (S1F) and Precision Securities LLC are not affiliated entities. 

Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.