Trading Places with Tom Bowley

Gold Tops 1300 And Reverses; Equities Close Out Rough Week

Market Recap for Friday, August 21, 2017

Late day selling killed the market's earlier attempt to rebound from Thursday's heavy losses.  A market that finishes multiple days in a row weak is a market that requires a renewed buying effort.  While we could see that at any time, let's keep in mind that it's the 21st day of August and this is the time of all calendar months that we need to be careful.

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Fear Escalates; Gold Nears Major Breakout

Market Recap for Thursday, August 17, 2017

For now it's just a short-term issue, but money is rotating to defensive areas and fear is rising.  The Volatility Index ($VIX) jumped over 32% yesterday to close at its 5th highest level of 2017.  The highest close of 16.04 is just 3% away so clearly nervousness is becoming an issue and is driving these much larger daily selloffs.  The NASDAQ 100 lost more than 100 points on Thursday, its sixth such decline in the past three months.  Prior to May, the last time the NASDAQ 100 lost 100 points was on September 9th, 2016.  This volatility is definitely becoming unnerving.  But worse yet, traders are growing accustomed to it as we see rallies follow.  This is setting up market participants for a much larger drop and a VIX move above 20 in my opinion.  That wouldn't necessarily be a bad thing as it would help to alleviate the weekly negative divergences that have signaled slowing price momentum since earlier this summer.

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NASDAQ 100 Again Gets Turned Back At Key Resistance

Market Recap for Wednesday, August 16, 2017

All of our major indices finished higher on Wednesday and seven of our nine sectors finished higher as well.  The primary laggard on the session?  Energy (XLE, -0.96%).  Go figure.  A significant reason for the XLE's renewed relative weakness has been the reversal in crude oil prices ($WTIC).  Since opening the month above $50 per barrel, black gold has fallen throughout August, including four of the last five trading sessions - and that recent weakness has broken the short-term uptrend that was established during the six weeks that concluded at the end of July:

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Strong Retail Sales Leads To.....Awful Performance By Retailers. Huh?

Market Recap for Tuesday, August 15, 2017

July retail sales doubled expectations (+0.6% actual vs +0.3% consensus estimate) and we saw the kind of reaction in the bond market that we'd expect with treasury prices tumbling and treasury yields spiking.  But what happened to retail stocks?  They fell out of bed with the S&P Retail ETF (XRT) dropping 2.7% and closing at its lowest level since the beginning of 2016.  Can you imagine the bloodbath if retail sales had missed estimates?

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Monday Was A Bullish Kind Of Rebound

Market Recap for Monday, August 14, 2017

When the stock market goes up, I want to see money rotate towards aggressive areas and we definitely saw that on Monday.  Technology (XLK, +1.59%), financials (XLF, +1.37%) and industrials (XLI, +1.05%) were the three big winners on the session and they're all considered aggressive sectors.  I also like to see wide participation and eight of the nine sectors advanced.  The final piece to the bullish puzzle is heavy volume.  That was clearly lacking yesterday as NASDAQ volume was just 1.7 billion shares, well below its 50 day moving average.  However, let's keep in mind it's the depths of summer when we typically see lighter volume.  Still, here's the chart:

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Evaluating The Technical Damage Inflicted On The S&P 500

Market Recap for Friday, August 11, 2017

Here's a fact:  The benchmark S&P 500, along with all the major U.S. indices, had a rough week last week.  Traders aren't used to weekly declines of more than 1%, yet that's exactly what we got last week.  The S&P 500 lost 1.43%, its second worst week since the November 2016 uptrend began.  Based on that alone, it's difficult to grow overly bearish as buyers have seemed to step up the past ten months no matter what the crisis.  This time could be different, however, as we're faced with seasonal headwinds in August and September and weekly momentum (MACD) has been flashing warning signs since the May breakout to fresh all-time highs.

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Key Support Levels Lost, Futures Weak; How Low Do We Go?

Market Recap for Thursday, August 10, 2017

Technology (XLK, -1.97%) and financials (XLF, -1.78) led a steep selloff in equities on Thursday.  It wasn't the worst day of the year for the NASDAQ, but it was pretty close.  That aggressive index lost both its 20 day EMA and 50 day SMA yesterday and futures are lower again this morning.  Prepare for more weakness.  We'll get a temporary bounce soon, but it's not likely to last as another significant leg lower will probably follow.

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Stocks Recover After Early Drop; Futures Weak Again

Market Recap for Wednesday, August 9, 2017

U.S. equities were under early fire on Wednesday, but there was a steady recovery throughout the balance of the day with little technical damage done by session end.  The Russell 2000 was one exception, however, as that aggressive small cap index closed beneath 1400 for the first time in the past 6-7 weeks.  That weak performance followed a 20 day EMA test from underneath with that moving average now threatening a death cross beneath the 50 day SMA.  Check it out:

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Brace Yourselves, The Summertime Doldrums Have Arrived

Reminder

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Market Recap for Tuesday, August 8, 2017

On the surface, it was just a simple day of profit taking.  But I think it will end up being much more than that.  The Dow Jones winning streak finally ended.  Not only had the Dow Jones finished with record high closes for the past nine trading sessions, but it also printed higher lows each of those days.  That streak ended as well with the Dow Jones struggling all afternoon on Tuesday as you can see below:

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Leadership Returns To NASDAQ 100; Watch This Key Resistance

Market Recap for Monday, August 7, 2017

There's nothing wrong with the Dow Jones moving to all-time highs for the ninth consecutive trading session.  However, higher prices on the more aggressive NASDAQ and Russell 2000 show traders' appetite for riskier investments and it's that risk element that helps to fuel bull markets.  On Monday, traders returned to the more aggressive NASDAQ 100 ($NDX) stocks.  In fact, the top three stocks in the NDX yesterday (and four of the top five) were semiconductor stocks ($DJUSSC).  The DJUSSC remains very solid on its daily chart, but the weekly negative divergence persists.  And let's not forget that the DJUSSC has averaged losing 5% during the month of September over the past couple decades.  So will this latest strength be the group's last for awhile?  We'll soon find out, but here's the chart to be aware of:

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Solid Jobs And Treasury Selling Lifts U.S. Equities

Special Note

I will be joining John Hopkins, President of EarningsBeats.com, for a special earnings-related webinar that begins at 4:15pm this afternoon, just after the market closes.  I'll be providing several of my favorite stocks from the current parade of earnings so please join me and John later today.  CLICK HERE for more information and to register for this special event.

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