Has the Market Bounced out of the August Funk?

August has been what I have been calling a pullback month.

The markets for the year have been performing really well.  Since the March lows it has gained in price until the peak this month.

In the chart image below, you can see I have a trend channel of sorts drawn in to signify the pull back that the month has seen.

My assessment is the pivot low of the month at 340 is a pivot support.

So long as the DIA, (ETF for the Dow Jones Industrial Average, stays above that pivot point I see it trading higher.  I could see it trading back up to its highs.

Market in Focus: DIA – aka the ‘Diamonds’: SPDR Dow Jones Industrial Average ETF Trust

This again is the year-to-date (YTD) candle chart of the DIA and I have added on the Fibonacci Retracement Tool for context of where support may have already been established.

The Fib takes the closing low price of a date range and connects a line to the closing high of that same range.

It then calculates percentage retracement percentages (based on the Fibonacci sequence).

If enough investors and traders use the Fib’s and make buying and selling decisions based on them, they become a self-fulfilling prophecy.

The 38.2% Fib level was hit, and DIA has bounced up from it, making it another reason I wouldn’t be surprised for the DIA going higher.

Power Profit Podcast

My friend and trading colleague Chris Johnson and I run weekly Podcasts on the financial markets called Power Profit Podcast. 

This is a great resource of information for Options Traders.

Below is the link to our latest one that you can find on my YouTube Channel: https://www.youtube.com/@TomGentileTrader

Feel free to pop on in there and subscribe for free to get notifications whenever more become available.

The latest Power Profit Podcast link: https://www.youtube.com/watch?v=pCAS1amNDZc, or watch below:

In it we discuss many items.

In or around the 6-minute mark I ask Chris about his take on Bank stocks, and he followed up with some commentary on them, especially the Regional Banks stocks.

One thing I’d like to encourage all you listening to the podcasts and that also have the tools.

When he or I or both of us are talking about a specific stock or sector of stocks utilize the tools to search up any number of scans to see if they are making the results lists of those scans as a way to search up possible options trades for consideration.

Case in point.

I looked up in the tools under the Money Calendar scan to see if there was a banking stock, specifically a regional bank that made it on to that scan for today.

Sure enough, there is.

FITB.

FITB is the ticker for a regional bank called Fifth Third Bancorp.

Look at the bullish data for FITB with a start date for today.

The first observation is the accuracy of 90%.

This means that 9 out of the past 10 years over the date range shown it has trade higher.

The range of the pattern is for a start date of today and an end date of Sept. 15, 2023.

The average profitable or price move over this range for FITB is $0.63.

That may not seem like a lot, but if you zoom in to the more recent years you can see a better than $0.63 price move.

Add the P/L for those 4-years and divide it by 4 and you get a higher than $0.63 average move.  It ends up more around $1.50.

One can then go into the tools option chain and look up and see what the options with an expiration just past the end date of Sept. 15 are priced for and check the possible percentage roi on that option with a move $1.50 higher.

My team and I have taught how to do that numerous times and take a look at the Risk Graph 3-part series of video trainings in the tools library to help with that.