Stocks pulled backed modestly on Thursday with pockets of weakness and strength that battled for control. Apple was down and that hurt the Dow and Nasdaq most. Retail stocks were very weak putting pressure on the S&P. But the financial stocks had a good day, and oil rallied sharply helping the oil sector stocks, so it was a mix but mostly down day. The Dow lost 46-points, the S&P gave up 5, or 0.22%, while the Nasdaq lagged, and small caps fell somewhere between those two with a 0.3% loss. The Transports continued their rallying was.
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The ECB disappointed a bit yesterday by holding things steady, not dropping rates or adding stimulus. The markets always like stimulus but "in the old days" an economy that does not need stimulating used to be good news.The S&P 500 (C-Fund) was down 0.22% yesterday and basically stayed within the range of the prior two trading days. It remains in a large, slightly ascending trading channel and if we want to get cute, it created a small flag over the last 5 days. There's not a lot of good things happening, but not a lot of bad either, so it has been very quiet, and it could be a calm before some kind of storm, but what kind of storm is what everybody wants to know.
The DWCPF (S-Fund) posted an inside day where the high and low for the day was inside the prior day's trading range. It's really nothing to write home about but there's not a lot else to write about it. We know it's in a bullish rising channel, possibly some kind of F-flag, and it will remain that way until it doesn't. When, and in which direction, it will break is the question and I don't think there's a lot of agreement on that at the moment.
The Nasdaq 100 was the laggard of Thursday losing almost 0.6% after hitting a triple top near 4840. The 20-day EMA held on the pullback. If Apple's trouble continues it may cause some problems here, but if can bounce back from yesterday's modest losses, we could finally get a breakout in the NDX. Bull market are usually led by the technology.
The big leader is the Dow Transportation Index and it continues to act well as it posted a 0.24% gain yesterday, bucking the trend of the broader market. Like I said yesterday, depending how and where you draw your resistance lines will tell you if this thing has broken out yet, but just above that 8100 area seems to be the big one. If that inverted head and shoulders can breakout, the upside H&S target would be quite impressive and the rest of the market would certainly take notice of the market leader breaking out.
The EFA (I-fund) pulled back with the rest of the market and the strength in the dollar yesterday didn't help. It remains above what looks to be the neckline resistance of another inverted head and shoulders pattern. That looks like an important level to look for support to hold if this little pullback continues.
The AGG (Bonds / F-fund) pulled back yesterday confirming that minor failed breakout from Wednesday. The trading range remains intact waiting for the Fed on interest rates. At some point this will break but until then bonds are acting quite boringly.
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Tom Crowley
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