*Click any chart to enlarge. Please read disclosures at the bottom of this page.
It was a solid week for the market, particularly with small cap value stocks, which surged 2.88%.
Next week we’ve the the FOMC on Wednesday - which always shakes things up.
You those of you who are rate-watchers, here’s an interesting data point;
So what will happen? Who knows? As always, we’ll let the technicals guide us.
Now, let’s get into the charts and see what’s going on.
S&P 500 Index (SPX)
SPX broke above resistance, based for a couple of weeks, and is now moving higher.
And that’s exactly what we like to see.
NASDAQ-100 Index (NDX)
Similar story with NDX as it continues riding above all four major moving averages.
Until further notice, the trend is up, up, and up.
Dow Jones Industrial Average (DJIA)
The DJIA went nowhere this week, weighed down by drops in Boeing (BA) and Caterpillar (CAT). Still, it’s basing sideways above all four moving averages so it’s hard to complain.
Russell 2000 ETF (IWM)
This is the start of the confirmation we’ve been waiting on for months as the Russell 2000 rallied over 2% on the week.
We need to get out of this range before I’ll be totally satisfied, but we’re moving in the right direction - finally.
S&P 500 Volatility Index (VIX)
I’d love to see this index crash right through that big support level next week.
Die, VIX, die!
Financial Sector SPDR (XLF)
XLF moving out and above resistance is good news, as financials often lead the market higher.
SPDR S&P Homebuilders ETF (XHB)
XHB came in a bit this week, closing below the short-term moving average. As we’ve been noting, there is a lot of resistance in this area to get through, and it looks like we’re going to need more time to do so.
VanEck Vectors Semiconductor ETF (SMH)
Breaking above resistance and into 52-week highs is good for SMH. I’d expect some consolidation in this area before heading higher.
US Dollar Currency Index (DXY)
CBOE Interest Rate 10-Year T-Note (TNX)
DXY looks like it’s getting ready to test the highs, while TNX is holding a major support level.
SPDR Gold Trust (GLD)
iShares Silver Trust (SLV)
Both GLD and SLV are doing some high level consolidation after recent breakouts.
West Texas Oil (WTIC)
Oil continues to snake along that down trendline and is now below all four major moving averages.
ETFMG Alternative Harvest ETF (MJ)
MJ continues to suck as it moves lower in this down channel. For more color on this, see the “Market & Trading” links a bit further down.
What at first looked like just another consolidation range in an uptrend, BTC is starting to show the first signs that it might be rolling over.
S&P 500 +1.65%, Dow +0.14%, Nasdaq +2.26%, and Russell 2000 +2.01%
The best asset class returns this week were Small Cap Value (+2.88%) and the worst were Non-U.S. Bonds (-0.56%).
Potential market-moving data next week: Personal Income and Personal Confidence (Mon), FOMC Meeting (Wed), ISM Manufacturing Index (Thur), and Employment Situation (Fri).
*Click any chart to enlarge. Please read disclosures at the bottom of this page.
Before we go to the charts, a lot of people might be here for the first time today. So I’m going to re-post an interview I did a while back with the folks over at the Limit Up! podcast.
It covers a bit about who I am, how I got here, and some of the things I’ve learned about trading over the last 30 years.
You can listen to the whole thing or just jump to some of the subjects we covered, including;
How I got into trading (2:31)
Why I use Technical Analysis (6:30)
The biggest challenge to successful trading (8:45)
Social media as a trading tool (11:09)
The one thing I make sure to do before entering a trade (19:59)
My best advice for new traders (22:01)
The scariest trade I ever made – and what I learned from it (23:45)
My most memorable trade – and what I learned from it (28:40)
My favorite toy (27:19)
There’s a lot of stuff packed into this quick 35-minute podcast, but if you’re short on time, make sure to check out the section on proper position sizing starting at the 14:45 mark. I’ve also written a short piece on this subject for those who can’t stand the sound of my voice (trust me, I get it).
Now let’s review some of the charts from previous weeks before getting into this week’s setups.
Back in April, I highlighted what looked like the beginnings of a trend change in NOC.
Since then the stock is up 25.8%, including 9.42% this week alone.
That’s a lot of Lund Loop subscriptions. 😃
ALLY Financial (ALLY)
A breakout from a few weeks back, ALLY just keeps going, adding another 2.06% this week.
SunTrust Bank (STI)
We’ve been on this breakout in STI for awhile and it gained another 1.68% this week.
Best Buy Co (BBY)
BBY is up 4.07% from last week’s newsletter.
Conagra Brands (CAG)
Also from last week, CAG is just now breaking above that down trendline.
Comcast Corp (CMCSA)
Last week I said this about CMCSA;
If it can print a reversal hammer somewhere in the support area, that would be a good long set up.
It did just that on Monday, and though the action afterwards was sloppy, it still managed to eek out a 1.29% gain on the week.
From last week, DOCU is just now starting to break out of that down channel.
Lincoln National (LNC)
Still waiting on the breakout in LNC.
McDermott International (MDR)
MDR triggered then failed. But I’m still keeping an eye on that big resistance level to see if it sets up again.
Invitae Corp (NVTA)
Another sloppy mover, but still, NVTA added 5.95% on the week.
Target Corp (TGT)
Still waiting on a clean breakout in TGT.
Now let’s take a look at some new setups.
As always, remember that volume is your friend for confirming breakouts, and don’t forget to check on earnings dates before entering any trade.
Boston Scientific (BSX)
Hovering just below 52-week highs, BSX is basing nicely in a down channel. The trigger is a break out of the topside of the channel - with volume.
ECL is riding above the short-term moving average and keeps testing this resistance level - and each progressive dip is shallower. Watch for an upside breakout here.
General Electric (GE)
Similar to what happened with NOC, GE is trying to make a major trend change.
Getting above this resistance level would signal that it may be happening. No matter what, this will be a long, slow trade.
We caught INTU on a breakout a few weeks back. Now it is basing nicely, setting up for a breakout above the top of the small rectangle.
Jefferies Financial (JEF)
In this top chart you can see that JEF broke out from a year-long downtrend a few weeks back. Now it’s basing in a nice range. A breakout above that range would signal the uptrend is resuming.
Village Farms (VFF)
We watched VFF for weeks, anticipating a breakout to the upside of this ascending triangle, but instead, it fell out the bottom.
But the move did not continue, and it has reversed back up into the triangle. As we’ve talk about in the past, failed breakouts/breakdowns often end up making powerful moves in the opposite direction.
That’s what we’re watching for here.
Market & Trading Links:
Could demographics drive this bull market for another 15 years? (Barron’s)
The 3-year drought in digital health IPOs is over. Are there more to come? (Business Insider)
A look at the ridiculousness that is Beyond Meat. (Ramp Capital)
Small caps falling behind could be a sign of economic troubles ahead. (The Wall Street Journal)
But the market can still do well if small caps underperform. 🤔 (All Star Charts)
It was another challenging week in the cannabis space;
If Elizabeth Warren becomes POTUS, she’s going to gut the banking industry. (The Reformed Broker)
Spotting a stock fraud before it’s too late. (Behavior Value Investor)
Netflix (NFLX) moved up 11 points from here. Just another reason to follow me on Twitter during the week.
You may have longer than you think to invest for retirement. (A Wealth of Common Sense)
The psychology of prediction. (Collaborative Fund)
“Oh…my…gawd, Brian? I can’t believe it. I was just thinking about you. Something totally crazy happened last week and you’re not going to believe it!”
That’s Jody, an imminent disaster I can’t save.
I don’t have the power.
My curse is that I can only see her fate, not change it.
Recently hired as a bartender at Whole Foods, she’s sweet, outgoing, and talkative – oh so talkative.
How old she is, how many siblings she has, where she grew up, who’s the most important person in her life, what her dream job is - Jody answered those and many other unasked questions by the second time we met.
If you’re keeping score at home, that would be; twenty-seven, five, Costa Mesa, her father, and an Instagram consultant.
After offering up that last one, I forgot myself for a moment and inquired, “an Instagram consultant?”
“Yeah, I’m really good at Instagram. I have a knack for it,” she said. “I know how to build big followings for brands and celebrities.”
“That’s cool. Whose accounts have you worked on?” I said, assuming it was her side hustle.
“Oh, nobody yet. But I know the strategies that work. I’ve used them on my own account.”
(Her account has 273 followers.)
I asked Jody if she was actively working on getting clients, but she said she didn’t know how to go about it.
“I can’t figure out how to convince people to pay me to do this?” she said.
The older I get, the more I find myself in these types of situations, where I’m tempted to offer advice.
Not the kind of advice you give a friend whose wife was killed in a drunk driving accident - designed to soothe, but unable to affect the outcome.
Nor the type you give a buddy when he tells you his wife is cheating, which can affect the outcome, but is impossible to know if it will be for the better, or the worse.
I’m talking about the type of advice distilled from five decades of trial and error, failure and success – which, if offered - has an immediate positive effect on someone’s life.
But not unlike giving out stock tips, dispensing advice to people is a game fraught with peril. It’s like giving a gun to a monkey – you never know what they’ll do with it.
Plus, Jody will never be more than a situational acquaintance. A superficial relationship that only exists in the confines of a three-by-ten bar top, between 6:30 pm and 8:00 pm every other Saturday.
There’s only downside for me in offering up unsolicited advice. So, of course, I offered unsolicited advice.
“I know it’s none of my business,” I began, using a line implicitly appended with “but I’m going to make it my business.”
“What you need to do is approach some brands and celebrities and offer them your services for free. Then once you’ve got the desired results, you can use it as proof of concept to solicit paying clients.”
She froze, staring straight at me, as if I’d thrown liquid nitrogen in her face. A few moments later, when the thaw came, she replied, “oh my gawd Brian. You are so smart. You are a genius.”
After that, I was Jody’s new best buddy. So much so that when I came in a couple of weeks later, she whispered into my ear, “I have a big problem, and I need your advice.”
The problem? A 502.
The charge is commonly known as drunk driving, DUI, or DWI, but in California, it’s almost always referred to as a “five-o-two” or a “deuce” – named after the section of the California Vehicle Code in which it originated.
“I got it driving home from a party last week,” she explained. “I haven’t told anybody else except my dad. I think I’ve ruined my life.”
Fresh off my previous mic drop advice, I sprang into action.
“No, you didn’t ruin your life,” I said.
“You made a mistake. Let’s face it; you fucked up. But nobody got hurt – this time. I want you to remember this feeling, so you’re never tempted to drive drunk again. And here’s how you need to deal with this...”
I told her to hire an attorney who specializes in drunk driving – any number of which can be found by looking at every fifth billboard along the Southern California freeways – and fight the charge aggressively.
“You’ll still get two points on your driving record and have to pay a fine,” I told her, “but you won’t have your license suspended, which means you can still go to work. Get on this first thing tomorrow.”
“Oh my gawd, thank you Bri. You’re the best.”
When I was in my early 20s, everyone I knew got a 502. And I mean everyone. Some more than once, like my future best friend, who got three.
His first one occurred when he came to a turn in the road and decided to keep going straight, plowing into the side of a liquor store — très ironic.
The impact folded his front tires up under the frame of his car, and despite his heavy intoxication and the blood flowing down his face from the gash across his forehead, he insisted to onlookers - in no doubt an unconscious homage to Jeff Spicoli - that he could “fix it.”
He got his second 502 after leaving a bar in Newport and going the wrong way down a one-way street. The third happened in Indiana, the details of which he can’t remember.
Then there was my best friend at the time, who initially was immune from getting a DUI – protected to be more accurate.
His father was a 30-year veteran with the Santa Ana PD, making him a legend throughout Orange County – something my friend never failed to mention to officers whenever he got pulled over – even though his dad would have kicked his ass if he knew he was using his name for a pass.
Even then, the casualness with which officers let him off surprised me.
Sometimes the cop would just tell him to have somebody else drive home.
Other times they’d say, “park the car and have someone pick you up.”
But more often than not they’d tell him, “just drive home carefully”- and let him go on his way.
I stopped counting the number of times he got off - when anybody else would have been taken to jail - because he was “Ken Wilkenson’s son.”
However, his luck finally ran out, when after a night of heavy drinking, he passed out at the wheel in a Del Taco drive-thru.
I’ll never forget the look on his face when he realized that the incessant tapping on his driver side window was coming from a police baton, not his buddies, all of whom – myself included – were watching from the parking lot, doubled over in laughter.
Because that’s how we viewed drunk driving in the 80s – as a joke.
It’s not cool or politically correct to say so now, but I was there, and that’s the way a lot of society viewed it, as illustrated by a bit comedian Sam Kinison did at the time - which you should skip if you’re easily offended;
There is such a moral push isn’t there in this country? To get us to try and behave.
Don’t try to drink and drive?
God, they have made such a big fucking deal about this, haven’t they?
It didn’t use to be such a big fucking deal. You had a few drinks; you drove home.
Now you’re a dick, you know? Now you’re a fucking asshole.
CHILD KILLER! CHILD KILLER! ATTEMPTED MANSLAUGHTER! ATTEMPTED MANSLAUGHTER!
You know, like you’re going out to your car and saying, “boy, I hope I slide into a family of six tonight, woohoo!”
“I bet you I can pass out before I hit the stoplight.”
Yeah, that’s not your fucking attitude. You’re doing your best. You know, don’t drink and fucking drive - shit, we don’t want to.
You don’t get fucked up so you can see how well you do on the test later.
But there’s no other way to get our fucking car back to the house. How the fuck are we supposed to get fucking home man?
We’ve got to drink and drive.
They don’t want to accept it; they don’t fucking want to accept it, like we’re all going to ride the bus? Give me a fucking bus pass, right?
[asking in slurred voice] Bus pass, please!
We’re not going to ride the bus, we’re going to fucking drink, and we’re going to drive, and we’re going to pull it off.
Because most of us do it every…single…fucking…night!
It’s so harsh in it’s printed form, but live, the audience members loved it, screaming and howling with laughter after each line was delivered.
Just like my friends and I did when we listened to the record.
But there’s an important difference most people didn’t understand.
The bit is funny. Drunk driving isn’t. No matter what era it occurs in.
But people make mistakes.
And the advice I gave Jody was the same I’d give my son or daughter, or anybody for that matter, whom I thought had made a mistake – one they’d never repeat.
But I was wrong.
“Oh…my…gawd, Brian? I can’t believe it. I was just thinking about you. Something totally crazy happened to me last week, and you’re not going to believe it!”
I sat there and listened as Jody filled me in on the events of the past few days.
It started with another problem.
Her best friend was having a bachelorette party in Vegas, but considering her recent troubles, she was reluctant to attend an event whose central theme would be alcohol.
Plus, the party was on Saturday, and she had to work an afternoon shift on Sunday.
But Jody had a plan.
“Okay. So, I knew that we’d be going to a club and that we’d be drinking until four in the morning,” she explained.
“So I just figured, I’ll fly into Vegas Saturday afternoon, go out clubbing all night, come back to the hotel and stay up for a couple more hours until I have to go to the airport and catch my 8:00 am flight.”
Her logic made my 51-year-old self cringe, but my 27-year-old self felt it was a solid plan.
As she continued, an inner dialogue began running through my head.
“But get this, Brian. We only stayed at the club until 2:30 am.”
Welcome to another episode of “Drinking Logic Gone Bad.”
“And when we got back to the hotel,” she continued, “we all flopped on the bed and started taking shots.”
Interesting visual, but I think I know where this is going.
“Next thing I know, my friends are shaking me saying, ‘Jody? Jody? You have to get up.’ And when I opened my eyes, it was 7:30 am. So I grabbed all my stuff, ran down into the lobby, and caught a cab to the airport. But when I got there it was too late; my plane had left. And they couldn’t get me on another flight until 8:00 pm.”
“Oh man, that sucks. What did you do?” I said.
Oh man, that makes perfect sense, I thought.
“Well, my friends were all leaving, but they said I should go back to the hotel, check my bag, and hang at the pool until it was time to return to the airport.”
Sensible plan. Relax by the pool, let the alcohol work itself out of your system, maybe even get some rest.
“So I got to the pool around 11:00 am and figured I should get a shot. You know, the hair of the dog?”
“And then I met a bunch of people and had like ten or twelve more shots.”
Of course you did!
“But I totally lost track of time and got to the airport late and made it onto my plane just before they closed the doors. Then after we took off, the couple next to me ordered Bloody Mary’s and said they’d buy me one, so I figured, why not?”
There was no way to be sure, but doing back of the cocktail napkin math, at this point I figured Jody must have consumed roughly 20 drinks in under 24 hours, which was tacitly confirmed…
“And Bri, when I landed at LAX, I realized I was still completely hammered.”
What a shock. I’ll bet it was some Uber ride home.
“And I still had to drive home.”
Turns out, Jody had driven to LAX.
She then proceeded to explain to me how she sat in her car for 30 minutes, trying to convince herself that she could navigate the drive home.
“I figured I’d just go for it. That I could pull it off.”
No, no, no, you didn’t? You didn’t embark upon an hour-long drive, while shitty drunk, less than two weeks after you got a 502? I know you didn’t do that.
“But I couldn’t bring myself to start the engine and take the chance.”
Yes, yes, smart girl.
“So I called my dad to see if he could pick me up.”
Yes, that’s the ticket. You made a series of bad decisions, but calling dad was the right move. You needed advice from someone you respected. Someone wise. Someone who always has your best interests at heart. That’s what dads are for. That’s their job. Alright, dad! Lay down the law!
“But he was out of town and said to get an extra-large black coffee.”
“Not a Grande, but a Venti.”
No, you didn’t, dad?
“And don’t put anything in it. No sugar. No cream. Just drink it black.”
WTF dad? You’re not helping here.
“So, I did. And I said to myself, ‘I’m going to put on one of my Spotify playlists and just concentrate on that while I drive.’”
Right. That’s right. When you’re completely hammered and must drive home, the Automobile Club, Mothers Against Drunk Driving, and the California Highway Patrol all recommend hot coffee and streaming music to get you there safely. Everybody knows that.
And I knew the rest of the story. I could read it blind. Thirty-minutes down the 405 Freeway, Jody got popped by the CHP for her second deuce in as many weeks.
Out of all of my friends, I was the only one who never got a DUI.
I probably should have. I made mistakes. I was lucky.
Sam Kinison wasn’t so lucky.
He was killed less than four years after he recorded that bit – and was stone sober at the time.
But the 17-year old who crossed the center line and slammed into his car wasn’t.
Convicted of vehicular manslaughter, he was sentenced to 1-year probation, 300 hours of community service, and had his license suspended for two years.
It was a different time with different laws. And people make mistakes.
I made one when I gave Jody advice. I thought I was advising a sweet, outgoing, talkative – oh so talkative – young lady.
And she is talkative, and outgoing, and oh so sweet. But I’m beginning to suspect she’s also a budding alcoholic, one who’s displayed monumental lapses in judgment.
And she’s going to kill somebody. Or herself. I know it.
I hope I’m wrong, but I feel it in my bones.
So I ask myself if things would be different if I’d followed my instincts and said nothing?
Would her license have been suspended?
Would she have fought the charges anyway?
And no matter what happened, would anything have prevented her from once again getting behind the wheel while loaded?
Maybe. But probably not.
In AA, they say that it’s the height of narcissism to think you can change the behavior of others.
That certainly rings true when it comes to Jody.
Which is just as well, because I have no more advice to give.
It’s Good, It’s Good
It was the thing that defined him. Then they took it away. The story of a man with a golden airline ticket. (Narratively)
I’m a traditionalist, but I’m down with this petition to change the date of Halloween. (CNN)
I love my dog. He’s like a family member. Which is why I ripped him from his mother when he was six-weeks old, keep him locked up in the yard or on a leash, and decide if his genitals should be removed. (The Guardian)
Stan Smith’s were my favorite when I was a kid. But I never realized there was a namesake behind the shoe. (Esquire)
During the curation process, I usually find at least one link that I fall in love with on multiple levels. This week, it’s this link. (The Mind Circle)
Paul McCartney has a brother. And he never left Liverpool. [H/T reader E. Wilson] (The Wall Street Journal)
Happiness is not a normal state. So give it a rest. (The Conversation)
My best friend will read this and disagree with every fiber of his being, but is it possible that Chicago’s true signature pizza is the exact opposite of deep dish? Chicagoans, weigh in on this one. (Bon Appétit)
The story of the NASA intern who bought the original Apollo 11 moonwalk tapes for $216.77 - and sold them for a cool $1.8 million. (Bloomberg)
I admit it, I’ve been slacking off on my music curation. Here’s something to make up for it;
When the algos surfaced this song in my ‘Discover Weekly’ playlist – the one that won’t help you drive when you’re drunk – I thought I knew which region it belonged to. The laid-back pace and Mariachi-style horn section led me to believe it came from somewhere in the Southwestern United States, probably circa early 70s. Instead, I discovered that was by Linda & Richard Thompson - key figures in the late 60s British folk scene. The what? Exactly. (Spotify)
That crazy “egg art” video everybody is talking about.
This amazing house is about 5 miles and $10 million dollars away from mine. (The Contemporist)
Sly Stallone has made millions off the ‘Rocky’ series. But he’s still bitter. (Variety)
Surf leashes were once called “kook cords” in a time when surfers were expected to “pay for their mistakes” by swimming after their boards. But in the early 70s, that all began to change. (Surfline)
Hollywood doesn’t adjust the box office for inflation, but if it did, these would be the top 10 highest-grossing films of all time in the U.S. (CNBC)
The man who turned stray URLs into a business. (Medium)
If you made it this far, boy do I have a treat for you. The story behind John Cage’s 4’33”. (Mental Floss)
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I appreciate you reading this week’s edition of The Lund Loop.
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Talk to you soon,
P.S. It should go without saying - but I’ll say it anyway - all opinions expressed here in The Lund Loop are my own personally and don’t reflect the views of my employer, any associated entities, or other organizations I’m associated with.
Nothing written, expressed, or implied here should be looked at as investment advice or an admonition to buy, sell, or trade any security or financial instrument. As always, do your own diligence.