Kirkpatrick's Weekly Market Strategist by Kirkpatrick & Company, Inc.

Kirkpatrick’s Weekly Market Strategist The technical stock market letter published weekly since 1976 october 20, 2017

Intermediate-Term Trend Table

Index Signal

BKX Up BOND Up UTY Up

Date

Sig Pr

Cur Pr

9/22 97.04 101.17 9/22 149 4/32 152 6/32 2/17 627 698

long-term u.s. tREASURY bONDS

*Change from last week

The re-optimized US Treasury Bond with the 5E model shows a buy signal way back in March at 146 22/32 and no change since. The negative crossover in the DMI could develop into a short sell signal if the price declines 1.2% below the low on the day of the crossover. This figure is 150 17/32, which if broken would be a short sale signal. The length of the DMI and the substantial smoothing factor make the DMI slow to react. Thus the signals are far apart and not usually close to the price turning points. I have drawn the forward line in red on the chart which gives a better idea of the current trend, which appears to be bottoming.

Conclusion: The position is long.

GOLD The gold future was run through an optimization using the model 5E, and as in the Treasury Bond, the ideal signals occur at lengthy intervals, almost as an intermediate-term signal for several months rather than weeks. To emphasize the shorter cycles I drew the forward line. Analysis of this line can be helpful. For example, the projected low from the downward crossing of the line in late September suggested an objective around $1,238 which is the distance from the peak to the line subtracted from the price where the line was crossed. The fact that gold is far from this price and beginning to bottom suggests that the underlying trend is still upward. If it was downward, the price would have exceeded the projection. Conclusion: The position is long.

Crude oil In the crude oil future, I also draw the forward line, and you can see that the model 5E gives a signal just as the price crosses the forward line. This confirmation gives me confidence in the model. The most recent signal was a buy. As for patterns, the price has formed a symmetrical triangle, broken up and out in September, thrown back to the cradle where the two bounds of the triangle meet, and now should be on its way in an intermediate-term advance. If the price breaks below the forward line and the cradle, we have a different story. Conclusion: The position is long.

Emerging stock markets The emerging markets ETF remains in its lengthy price channel and appears to be correcting back to the lower bound. The DMI is not telling us much because both the DI+ and DI- are running parallel. Conclusion: The position is flat.

bitcoin market

The Bitcoin market keeps rising in an accelerated curve. I suspect that when this rise is over it will be equated to the South Seas Bubble, which broke Sir Isaac Newton when it crashed. Conclusion: The position is long.

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

23,329 6,109 1,135

The momentum oscillators are oversold. The breadth oscillator has given a buy signal, and the KEVIN will soon. Sentiment is generally pessimistic as usually occurs at a trading cycle low, and the indexes are at or near a new high. I have drawn the forward line on the S&P daily chart, and you can see that prices are not only above it but also have been for many weeks having reached an objective far about any projection from the August low. All this remains positive for the stock market. We may be in the last upward leg, but there certainly are no signs that it is ending. In the Nasdaq 100 hourly future took a small hit this past week, losing 2.75 points or $55.00.

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 slowly beginning to advance again, and the DI- is turning downward. This action suggests that the intermediate-term cycle, upward trend is still alive. The buy signal in the moving-average crossover model remains the same, and the Buy-line average is also beginning to turn upward along with the sell-line. Both methods together suggest that a portfolio should be 100% invested in the Bargain List for the intermediate-term.

STOCK SELECTION

BARGAIN LIST For Week Ending 10/20/17

Security Description SYMBOL

PRICE RELATIVES Close PCNT PRICE P/SLS

ADDED SUGGESTED DATE PRICE G/L STOP

**NEWLY SELECTED STOCKS Cree Inc

CREE

33.84+15.2%

97+ 9

49+ 4

Micron Technology

41.50+ 2.7%

97+ 1

49+ 2

Kemet Corp

Restoration Hardware Hol

KEM

26.12- 0.8%

83.79+ 4.6%

98+ 1

16+ 1

**DELETED FOR REL PRICE Gopro Inc Cl A

GPRO

9.47- 1.0%

57- 6

9/15/2017

11.52 - 17.8%

8/25/2017

67.33 -

92- 1

7/14/2017

**BARGAIN LIST - COMPLETE 58.Com Inc

WUBA

67.08- 0.6%

Alibaba Group Holding Lt

BABA

177.32- 0.7%

Aerojet Rocketdyne Holdi Align Technology I

Amicus Therapeutics Arista Networks Inc Baozun Inc Ads Cree Inc

Dynavax Technologies Esperion Theraptc

Exact Sciences Cor

Fiat Chrysler Automobile Fibrogen Inc CS First Solar Inc

Grupo Supervielle S.A. Iac/Interactive

Juno Therapeutics Kemet Corp

Micron Technology

New Oriental Education & Nvidia Corp

Puma Biotechnology

Restoration Hardware Hol Sarepta Therapeutics Scientific Games Sina Corp

Sociedad Quimica Y Miner Square

Stamps.Com Inc

Tableau Software Inc Cla Take-Two Interacti

Tal Education Group

AJRD ALGN FOLD

34.40+ 1.8%

200.88+ 4.1% 13.59- 6.5%

ANET

191.68+ 0.2%

CREE

33.84+15.2%

BZUN DVAX ESPR EXAS FCAU FGEN FSLR SUPV

33.87- 6.4% 20.40- 6.9% 47.19-12.5% 49.15+ 3.6% 16.71- 5.9% 54.65- 0.2% 47.73+ 0.2% 25.59+ 2.5%

IAC

124.72- 0.7%

KEM

26.12- 0.8%

JUNO MU

EDU

NVDA PBYI RH

SRPT SGMS SINA SQM SQ

43.71+ 1.8% 41.50+ 2.7% 92.75- 1.2%

196.90+ 1.1% 124.65+ 0.2% 83.79+ 4.6% 51.94+ 2.7% 43.50- 2.7%

110.48- 5.3% 59.30- 1.1% 32.50- 1.0%

STMP

221.85+ 1.6%

TTWO

104.93+ 0.3%

DATA TAL

78.78+ 1.4% 34.91- 0.9%

95+ 1 94- 3 91

96- 2 97+ 9 99

68-25

31 95+ 1 98 93

62- 3 49+ 4 99 0

97+ 1

37+ 1

96- 2 87- 2 91- 2 98 99

97+ 1 92- 1 97+ 1 99

41- 1 60 98

9/22/2017 4/28/2017

10/ 6/2017 2/17/2017 9/15/2017

10/20/2017 10/ 6/2017 6/23/2017 4/14/2017 8/25/2017

10/ 6/2017 7/28/2017 9/22/2017 5/12/2017 9/15/2017

10/20/2017

5/12/2017

49+ 2 95 0

10/20/2017 5/19/2017 9/ 8/2017

98+ 1

16+ 1

10/20/2017

30- 1

9/22/2017

10/ 6/2017

5/26/2017

98+ 1 87- 7 97- 1 98 91 96 98

85- 1 85- 1 87 95

10/ 6/2017 5/19/2017 2/24/2017 8/ 4/2017 7/14/2017

33.89 +

0.4% 1.5%

58.59 26.41

151.83 + 16.8% 166.79 134.62 + 49.2% 180.31 15.06 -

9.8%

13.07

119.06 + 61.0% 169.61

37.70 - 10.2% 33.85 -

0.0%

20.50

44.34 +

6.4%

43.06

23.10 - 11.7% 23.27 +111.2% 14.85 + 12.5% 55.20 -

1.0%

23.69 +

8.0%

48.87 -

2.3%

15.70 37.30 12.35 40.26 45.26 17.90

102.59 + 21.6% 103.02 44.30 -

1.3%

26.40

41.50

0.0%

28.72

26.12

0.0%

71.59 + 29.6%

19.17 81.34

136.00 + 44.8% 157.37 104.25 + 19.6% 83.79

0.0%

42.95 +

1.3%

50.71 + 102.11 + 58.94 +

2.4%

0.6%

35.26 33.70 41.55 24.22

2.6% 185.80

71.31 + 10.5% 77.07 + 36.1% 0.00 +

44.00

8.2% 109.78

17.43 + 86.5%

216.25 +

77.65

1.0%

73.18 95.94 30.51

Vertex Pharmaceutic

VRTX

Winnebago Industries

WGO

Weibo Corp. Ads YY Inc GROUP

AVERAGES

81- 1

4/ 7/2017

47.75+ 9.7%

98+ 2

21- 2

9/22/2019

95.48- 4.3%

NUM=

154.63+ 1.1%

93.12- 0.2% 36

====== 0.0%

92- 4 98

===== 94

97 67

===== 71

5/19/2017 7/14/2017

115.88 + 33.4% 147.30 78.31 + 21.9%

93.94

63.49 + 46.7%

68.44

42.40 + 12.6%

33.15

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: Relative Price Percentile = < 58

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)

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. www.charleskirkpatrick.com • kirkco@capecod.net • © 2017 Kirkpatrick & Company, Inc. All Rights Reserved • October 20, 2017 • Page 6

ADDITIOns TO THE bargain list

deletions from THE bargain list

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

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.

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.