Welcome to the recap of Friday's MarketWatchers LIVE show, your antidote for the CNBC/FBN lunchtime talking heads. Listen and watch a show devoted to technical analysis of the stock market with live market updates and symbols that are hot.
Information abounds in our Monday/Wednesday/Friday 12:00pm - 1:30pm EST shows, but the MWL blog will give you a quick recap. Be sure and check out the MarketWatchers LIVE ChartList for many of today's charts. When you first arrive at the MarketWatchers LIVE blog page, you'll see a link to the ChartList in the upper left corner.
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What Happened Today?
Tom discussed the July nonfarm payrolls report released prior to Friday's open, indicating that it came in ahead of Wall Street estimates. But with earnings reports mostly better than expected and a solid report card on the earnings front, the U.S. indices have really struggled to push higher, especially on the tech-laden NASDAQ, which has underperformed the Dow Jones rather badly over the past two weeks and the past two months. There are likely two reasons. The first reason is the rapidly declining U.S. Dollar Index ($USD), which provides multi-national companies - all of the Dow Jones component stocks - a major earnings boost in terms of currency translation gains. The other problem is that weekly negative divergences are everywhere - from our major indices to most of our sectors, as well as key industry groups - particularly the industry groups within technology that have provided the market so much leadership during the rally since early November. The negative divergence on the Dow Jones U.S. Internet Index ($DJUSNS) is one such example:
Greg Schnell discussed a major issue to consider when trading international ETFs. They don't perform the same as the underlying index that tracks that country's stock index. The reason? The ETFs are traded in U.S. dollars where the country index is not. Therefore, many foreign ETFs have produced excellent gains in 2017, prompting incorrect assumptions that those international markets are outperforming the benchmark S&P 500 here in the U.S. The chart below is a perfect example of how a Fast Money panelist incorrectly suggested that the Mexico market was performing wildly stronger than the U.S.:
While the relative strength in Mexico has improved a bit in 2017, the overall relative downtrend vs. the S&P 500 remains in play and the "breakout" in Mexico, as reflected on the bottom part of the chart above, was truly the result of the sinking U.S. dollar. The moral of the story? Be careful what you're investing in. Great job Greg!
10 in 10
During his regular segment at 12:50pm EST, Tom showed how quickly you can review and annotate 10 stocks into a ChartList using the powerful tools here at StockCharts.com. Symbol requests were sent in by viewers on Twitter and GoToWebinar as Tom demonstrated how to use the annotation tool to highlight key levels of price support/resistance, trendline support, candlestick patterns, etc. Symbols reviewed today included ACAD, IMGN, HBAN, IHI, CREE, CF, CBI, CMG, GILD and PXD. You'll find all of the charts in the MarketWatchers LIVE ChartList, located at the top of the MarketWatchers LIVE blog page, or simply CLICK HERE. This link provides many annotated charts from the last two MW Live shows.
Every Friday afternoon, Tom reviews a company that has recently beaten Wall Street consensus estimates with regard to revenues and EPS. In addition to positive fundamental news, Tom looks to see that the market has received the news bullishly as well in terms of price action. On Friday, Tom highlighted Aaron, Inc (AAN), which posted revenues of 815.6 million (actual) vs. 790.4 million (est) and EPS of .68 (actual) vs. .58 (est). The chart, showing the market's bullish reaction, is included in the MarketWatchers LIVE ChartList. The link is provided above.
Next week continues the earnings parade, although most of the S&P 500 companies have now reported their quarterly results. Still, more than 1000 companies will report their earnings this week, so that will remain the theme of the market for the near-term. We're moving into the heart of the summer months and we know August and September are the S&P 500's two weakest months. Stay tuned as Tom and Greg keep you up to date on the latest technical happenings and of course....
About the author:Tom Bowley co-founded Invested Central and served as the site's Chief Market Strategist for more than 10 years.
His unique trading style combines both his fundamental and technical strategies to systematically manage risk while trading.
A regular contributor to StockCharts.com's bi-weekly ChartWatchers newsletter since 2006, Tom's role at StockCharts has expanded significantly since he joined the company as a full-time Senior Technical Analyst in March of 2015.