Kirkpatrick's Weekly Market Strategist

Kirkpatrick’s Weekly Market Strategist The technical stock market letter published weekly since 1976 october 13, 2017

long-term u.s. tREASURY bONDS

Intermediate-Term Trend Table

Index Signal

BKX Up* BOND Up UTY Up

Date

Sig Pr

9/22 97.04 9/22 149 4/32 2/17 627

Cur Pr

98.88 154 687

*Change from last week

The sell short signal from last week in the US Treasury Bond market was stopped out almost immediately.

The DI- is still above the DI+ suggesting that the rally is unlikely to change the longer-term trend, but another sell signal is unlikely right away.

Conclusion: The position is flat.

GOLD The buy signal in gold last week proved to be fairly accurate, at least so far. Recently, the gold prices has been correlated with the long-term bond, and it remains to today.

By rights then the bond market should have generated a buy signal as well. I may have to look at that market again, more closely, to see why the system didn’t work.

Conclusion: The position is long.

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Crude oil The crude oil futures continues to behave in the classic manner after breaking upward from a symmetrical triangle and then throwing back to the cradle before the major change in direction begins in earnest. The current rally by this interpretation should continue upward and break above the September high.

Conclusion: The position is long.

Emerging stock markets The sell signal last week in the Emerging Markets ETF was premature last week and stopped out this week with a continuation of the long-standing rally. At this point the price is at the extension of the upper bound in the advancing channel and my now correct as it has every month or so since its beginning in January.

Conclusion: The position is flat.

bitcoin market

The positive crossover in the Diff Model last week finally caught hold and signaled a buy in the Bitcoin market. We took a small loss from a whipsaw but compared to the gain since the signal it was of little consequence.

Conclusion: The position is long.

www.charleskirkpatrick.com • kirkco@capecod.net • © 2017 Kirkpatrick & Company, Inc. All Rights Reserved • October 13, 2017 • Page 2

STOCK MARKET Trend Table

Index Signal

DJIA Up NDX Up OEX Up VIX Up

* change last week

Date

Sig Pr

Cur Pr

3/25/17 5/27/16 7/15/16 6/2/17

17,621 4,760 948

22,872 6,092 1,126

The momentum oscillators have now reached oversold below their standard deviation and are in position for buy signals over the short-term. In addition, the sentiment indicator of call to put volume is also close to oversold and turning upward. It seems the attitude during the recent week has become pessimistic while the prices have remained steady. This usually means that the stock market will rise, and from the current location at the upper bound of a rising channel pattern, the next upward leg could very well be a spectacular speculative rise that carries prices to even more absurd levels. At the very least the rise should push the oscillators above their upper standard deviation and cause sentiment to become excessively bullish. When this occurs, it will be the time to consider sales of stock.

In the Nasdaq 100 hourly future the system was profitable again this past week. The ride was quite “bumpy,” but the result was favorable after several scary drawdowns and mini panics. The gain for the week was 34.5 points or $690 per contract.

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Market Timing

Intermediate-Term - Both technical indicators remain in sync on the upside. This is portrayed in the charts above. As would be expected, the Diff-model, buy signal occurred when the price broke to a new high above the 2016 congestion in the DJIA and S&P 500. Now you can see that the DI+ is arching slowly over while the DI- has yet to turn upward. This is an early signal that the intermediate-term cycle is peaking. The buy signal in the moving-average crossover model remains the same, yet the Buy-line average is close to negative, and the sell-line appears to be slowly decline as well. Both methods together suggest that a portfolio should be 100% invested in the Bargain List for the intermediate-term. On the other hand, early signs of deterioration are beginning to appear.

STOCK SELECTION

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BARGAIN LIST For Week Ending 10/6/17

Security Description SYMBOL

PRICE RELATIVES Close PCNT PRICE P/SLS

ADDED SUGGESTED DATE PRICE G/L STOP

**DELETED FOR ADX or RELATIVE PRICE Autohome Inc

ATHM

Shopify Inc

SHOP

Sanderson Farms In Weight Watchers Internat

SAFM

60.46- 1.6%

94- 2

88

8/25/2017

94.22- 3.8%

41-21

96

2/17/2014

146.60- 2.0%

WTW

44.85+ 0.1%

84- 4 97- 1

24

9/15/2017

49

3/ 7/2017

63.70 -

160.08 -

5.1% 8.4%

61.52 + 53.2% 17.01 +163.7%

**BARGAIN LIST - COMPLETE 58.Com Inc

WUBA

67.44+ 3.9%

97+ 1

88+ 1

8/25/2017

Alibaba Group Holding Lt

BABA

178.45- 0.5%

93- 2

96

7/14/2017

FOLD

14.53- 3.6%

Aerojet Rocketdyne Holdi Align Technology I

Amicus Therapeutics Arista Networks Inc Baozun Inc Ads

Dynavax Technologies Esperion Theraptc

Exact Sciences Cor

Fiat Chrysler Automobile Fibrogen Inc CS First Solar Inc Gopro Inc Cl A

Grupo Supervielle S.A. Iac/Interactive

Juno Therapeutics

New Oriental Education & Nvidia Corp

Puma Biotechnology

Sarepta Therapeutics Scientific Games Sina Corp

Sociedad Quimica Y Miner Square

Stamps.Com Inc

Tableau Software Inc Cla Take-Two Interacti

Tal Education Group Vertex Pharmaceutic Weibo Corp. Ads

Winnebago Industries YY Inc GROUP

AVERAGES

AJRD

33.77- 3.7%

ALGN

192.81+ 3.0%

ANET

191.14- 1.0%

DVAX

21.90- 5.2%

BZUN

36.18+ 5.9%

ESPR

53.92- 4.1%

EXAS

47.41- 2.6%

FCAU

17.75+ 0.8%

FGEN

54.75- 0.9%

FSLR

47.60- 1.3%

GPRO

9.56- 3.3%

SUPV

24.96+ 3.2%

IAC

125.53+ 2.6%

JUNO

42.90- 1.7%

EDU

93.80+ 2.3%

NVDA

194.59+ 7.3%

SRPT

50.57- 0.3%

PBYI

124.35+ 2.4%

SGMS

44.70- 7.0%

SINA

116.59+ 1.1%

SQM

59.90+ 1.6%

SQ

32.81+ 6.6%

STMP

218.35+ 0.9%

TTWO

104.58- 2.5%

VRTX

152.91- 1.5%

DATA

77.67+ 0.3%

TAL

35.20+ 3.6%

WB

99.74- 0.7%

WGO

43.50+ 0.6%

YY

NUM=

93.22+ 5.0% 33

====== + 0.3%

97- 1 94+ 2 97- 1 91- 2 98+ 1 99

31- 1 94

9/22/2017 4/28/2017

98

10/ 6/2017

93

65+ 3

2/17/2017 9/15/2017

99

10/ 6/2017

96- 1

97

4/14/2017

99

97

63-12

24- 1

93- 3 98

89- 2 96

93+ 2 98 93

96+ 2 99

97- 1

0

6/23/2017

2

8/25/2017

10/ 6/2017

42

36+ 1 60+ 1 98 89

7/28/2017 9/15/2017 9/22/2017 5/12/2017 9/15/2017 5/12/2017

95

5/19/2017

0

9/ 8/2017

0

10/ 6/2017

86

5/19/2017

98- 1

31- 2

98

88

10/ 6/2017

91

10/ 6/2017

83

5/26/2017

94

98+ 2 98+ 1 91

96- 1 98

82- 4 96- 1 96 98

===== 94

0

86+ 2 87

2/24/2017 8/ 4/2017

95

7/14/2017

96

4/ 7/2017

97

5/19/2017

23

67+ 3 ===== 74

9/22/2017

9/22/2019 7/14/2017

67.33 + 33.89 -

0.2% 0.4%

58.59

26.16

151.83 + 17.5% 166.79 134.62 + 43.2% 180.31 15.06 -

3.5%

13.07

37.70 -

4.0%

25.74

44.34 + 21.6%

43.06

119.06 + 60.5% 169.61 23.10 -

5.2%

23.27 +103.7% 14.85 + 19.5% 55.20 48.87 -

0.8% 2.6%

11.52 - 17.0%

15.20 36.10 11.53 33.10 45.26

8.67

23.69 +

5.4%

16.83

44.30 -

3.2%

26.40

102.59 + 22.4% 100.57 71.59 + 31.0%

81.34

136.00 + 43.1% 152.91 104.25 + 19.3% 50.71 42.95 +

0.3% 4.1%

71.14 35.26 33.70

102.11 + 14.2% 109.78 58.94 +

1.6%

17.43 + 88.2%

216.25 + 71.31 +

24.22

1.0% 185.80 8.9% 106.21

77.07 + 35.7% 0.00 +

39.24

1.0%

95.94 30.51

115.88 + 32.0% 147.30 78.31 + 27.4%

93.94

63.49 + 46.8%

68.44

42.40 +

2.6%

33.15

0

www.charleskirkpatrick.com • kirkco@capecod.net • © 2017 Kirkpatrick & Company, Inc. All Rights Reserved • October 13, 2017 • Page 5

Legend for Stock List u EX = If an “XX” is present, it means that the stock has met the sell trigger under the new rules for deleting stocks from the Bargain List. u Security Description = Name of underlying company. u SYMBOL = Exchange symbol for stock. u PRICE = Includes the Close and the percentage change (PCNT) over the previous week. u RELATIVES = Each column includes the percentile and its change from the previous week. The relative percentile columns are different for each list and are listed in the table below: u ADDED = Data pertaining to when and at what price the stock was added to the list. “G/L” is the gain or loss in the stock as of the report date (upper right corner).

Bargain List Rules Addition to Bargain list – Stock is added to the Bargain list when all of the factors below have been met: Relative Price Percentile > 97 50 day SMA Volume times Close = > $50,000,000 Last Price= > $10 Deletion from Bargain list – Stock is deleted from the Bargain list when any of the factors below are met:

Chart Legend On Weekly Price Chart Vertical Black Bars = Weekly Price Range Red Line = Forward line (16w SMA, fwd 16w) Small Red Dots = Important low carried forward Large Blue Dots = Broke above an important high Large Red Dots = Broke below an important low Below Weekly Price Chart Green Line = ADX (16-weeks) Blue Line = DMI buying pressure (16-weeks) Red Line = DMI selling pressure (16-weeks)

Relative Price Percentile = < 58 Sell on close below nine-week low or last two-bar reversal low Peak in ADX

Note: Relative percentiles are between 99 and 0, with 99 the highest.

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ADDITIOns TO THE bargain list NONE deletions from THE bargain list

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The following stocks newly passed the relative strength test using only the closing price to a 61-week, moving average as outlined in my book “Investment and Trading Strategies, Chapter 5, pg 79” Warning!!!

These stocks are very speculative in the current market environment

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Glossary of Indicators KEVIN The KEVIN oscillator is simply the 8-day moving average of the daily up-volume divided by the total of daily up-volume and down-volume. It was presented to me by an old floor-trader friend named Kevin MacNamara, thus the name “Kevin.” I don’t believe you will find in it in any technical references, but as you can see it is very simple and effective.

FORWARD LINE When analyzing the cyclical nature of price behavior, I find that moving averages are very useful to dampen shorter- and longer-term price trends. This allows me to concentrate on a specific cycle in the data. Without going into great detail, however, let me give you an example.

Let’s say a stock index appears to have a 20-day cycle. Using a 10-day moving average, we eliminate the effects of price motion of 10 days and less, allowing us to concentrate on the next higher order cycle, in this case the 20-day and longer cycles. Half the suspected cycle length is usually the period for the calculating the moving average.

When we plot a moving average, however, it lags behind current price behavior because it is being affected by the past prices in the average. To be absolutely true, a moving average should be plotted half the period back from the present. Thus a 10-day moving average should be plotted 5 days behind the present. A moving average is not just an average of prices but also an average of time. The average of price in our example is 10-days, and the average of time is halfway through the period or 5 days earlier.

If a cycle of 20-days exists in the data, and we are representing it by a 10-day moving average plotted 5-days earlier, we will see the highs and lows in the average roughly 10-days apart - high to low and low to high.

The full cycle would be from high to high or low to low of 20 days. The rising portion and declining portion of a 20-

day cycle lasts 10-days, ideally. We now plot the moving average ahead 10-days from the true plot (or 5 days from the current price). This is called the “forward line.” When the current 20-day cycle is rising, the forward line should be declining because it is half a cycle forward. Crossing above the forward line should ideally occur when the rise is half over. Breaking the forward line can thus be a means of estimating where the next target will be. Because the rise is half over when the forward line is broken, the second half should occur at roughly the same distance (if the cycle is valid and flat).

I know, it sounds complicated. It isn’t really, but does sound that way from my trying to describe it. The thing to remember is that if the forward line is broken, say from the upside, the downward price target will be the distance from the top price to the forward line projected below the forward line. If the price stops at the forward line, we know that the underlying trend is strong. If the price exceeds its forward line target, a larger trend reversal is likely developing KIMM KIMM is used in the monthly overview as one measure of longer-term stock market momentum. It stands for Kirkpatrick Indicator of Market Momentum. It is a composite of the 12-week momentum of all stocks listed on the New York Stock Exchange. Each stock is given a weight of plus or minus one based on its 12-week price momentum, either upward or downward. The KIMM is the total of all the weights. Thus, a reading of +1000 says that the number of stocks with positive 12-week momentum is a plurality of +1000. That might be 2000 stocks with a plus rating and 1000 with a minus rating. The net is +1000. KIMM generally follows the market and is useful as an overbought/oversold intermediate-term oscillator. Generally, a bullish signal develops when the KIMM above the -1000 level from below, and a bearish signal develops when the KIMM declines below +1000 from above.

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Description of Notes on DMI max diff model charts Length = smooth = LAG = PCUP= PCDN=

The length of the DMI in bars sometimes the dmi is smoothed with an average calculation.

SOMETIMES THE DMI IS LAGGED BY A NUMBER OF BARS

PERCENTAGE RETRACEMENT OF DI+ MINUS DI- TO GIVE A SELL SIGNAL PERCENTAGE RETRACEMENT OF DI- MINUS DI+ TO GIVE A BUY SIGNAL

entry stop: le= The percent that the price must rise above the signal bar high to

confirm a buy signal. se= the percent that the price must decline below signal bar low to

confirm a sell signal. exit stop: stop or stop and reverse percentage from initial signal entry. lx= The percent that a price must decline from the first entry. sx= the percent that a price must advance from the first entry.

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