JD.com Inc. suffered a deep sell off after leaving behind an ominous spike high in mid June.  Over the last four weeks the stock has been consolidating near a major support zone.  This key area, marked by a massive earnings driven breakout gap, has held six of the last ten monthly lows.  Is a low risk entry opportunity developing? 

From Investopedia:   The S&P GSCI is a composite index of commodity sector returns which represents a broadly diversified, unleveraged, long-only position in commodity futures. The S&P GSCI is intended to provide exposure to broad-based commodities. The S&P GSCI was previously known as the Goldman Sachs Commodity Index (GSCI) but was purchased by Standard & Poor’s from Goldman Sachs in 2007.

Crude has a bearish (head & shoulders) pattern on this Daily Chart.  It is just holding its trend line on a Weekly.

Toll Brothers has had a very rough go this year.  At last month’s low the stock had fallen nearly 35% from the January highs.  In late June TOL appeared to have reached a significant low as the 40 week moving average came into play.  As the month dragged on shares fell to new 2018 lows while putting in a sixth straight lower monthly low.  So far this month the stock is showing signs of stabilization.  TOL is working on a higher monthly low while tracing out a divergent MACD pattern.  In the near term we consider the stock a low risk buy near current levels. 

Trading notes:

TOL put in a major low in August of last year.  From the Aug. 22, 2017 lows the stock surged nearly 40% by the start of December.

The stock’s 40 week moving average($36.00)has proven to be quite heavy in the past(Q4 of 2017, Q4 of 2016).  A close back above this level would be very encouraging. 

TOL should be considered a low risk buy near current levels.  A close back below $34.00 would violate the July low indicating the 40 week moving average is continuing to apply pressure.

Earnings are due August 21.  The August earnings report last year marked a major bottom.

At time of publication we do not have a position in TOL.

From Ryan Detrick:   The current bull market is less than a month away from becoming the longest bull market ever….

We got your profit margins right here:

Profit margins for companies in the S&P 500 Index rose to 11.7% in the 2nd quarter,  their highest level in history.

Rollbacks matter...

Very bullish, but, there’s this from legendary investor Jeremy Grantham:   “Profit margins are probably the most mean-reverting series in finance, and if profit margins do not mean-revert,  then something has gone badly wrong with capitalism.” 

Invest wisely my friends.

More on Jeremy Grantham:   www.wikipedia.com

Hat tip Charlie Bilello

Nice looking chart for the “Buck” as it hits multi month highs out of a basing pattern.

Monthly Chart – For all the bad news on Tesla, it remains a bullish chart.