Trading Places with Tom Bowley

Utilities Taking Advantage Of Tumbling Treasury Yields

Market Recap for Friday, February 24, 2017

The 10 year treasury yield ($TNX) tumbled 7 basis points on Friday and that continued the recent string of solid days for utilities (XLU, +1.52%).   Healthcare (XLV, +0.48%) is also benefiting from the rotation to defensive areas of the market as the XLV has been the best performing sector over the last 30 days with a gain of 8.27%.  Utilities aren't far behind, gaining 6.63% over that span.  The XLV could run into price resistance difficulties, however, as it's nearing its August 2016 closing high of 75.06.  Take a look:

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Lessons To Be Learned From A Consolidating Industry Group (Tires)

Market Recap for Thursday, February 23, 2017

The action on Thursday was not bullish at all.  Yes, the Dow Jones and S&P 500 rose again with the Dow setting another all-time high.  Great action, right?  Wrong.  The more aggressive NASDAQ and Russell 2000 both fell again by .43% and .66%, respectively, and that's unfortunately been the pattern of late.  The stock market moving higher - or attempting to move higher - with leadership coming from defense.

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Commodity Chemicals Break Out Again, Look Very Bullish

Market Recap for Wednesday, February 22, 2017

Utilities (XLU, +0.42%) showed relative strength again on Wednesday, leading the charge on an otherwise bifurcated kinda day.  The Dow Jones was able to finish the session with a gain, but the benchmark S&P 500, NASDAQ and Russell 2000 were all noticeably weaker, especially the latter as small caps lagged with a 0.46% decline.

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Warning Signs Beginning To Emerge

Market Recap for Tuesday, February 21, 2017

Our major indices saw another solid day of gains with the Dow Jones, S&P 500, NASDAQ, NASDAQ 100 and Russell 2000 all breaking out to all-time highs once again.  All nine sectors advanced and small caps led on a relative basis.  But that's about where the positive "beneath the surface" signals ended.  I've detailed some warning signs below in both the Current Outlook and Sector/Industry Watch sections.  I'm not bearish, but action that's developed over the past few weeks needs to be monitored closely as we move through the next few weeks.

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Will Homebuilders Finally Make Their Breakout?

Market Recap for Thursday, February 16, 2017

U.S. indices finished in bifurcated fashion on Thursday as the Dow Jones logged gains, the S&P 500 finished flat and the NASDAQ and Russell 2000 both finished with minor losses.  We could see some additional weakness in coming days based on very overbought conditions and historical bearishness during the upcoming week in February.  More on that below.

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Is The Market Topping? Relative Sector Performance Says NO WAY!

Market Recap for Wednesday, February 15, 2017

Healthcare (XLV, +1.08%) resumed its leadership role but relative performance in this sector has been quite weak since the summer.  Below is a chart that shows a ratio of the XLV to the S&P 500.  If you've been buying and holding this sector, you've experienced underperformance and that's not unusual during bull markets.  Since August 1, 2015, the XLV is down just slightly on an absolute basis, but on a relative basis it's been very weak.  Check it out:

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These Are Two Very Bullish Components Of The NASDAQ 100

I'll return tomorrow morning with my regular Trading Places article with all the normal features.  Today I simply want to point out two component stocks in the NASDAQ 100 ($NDX) that look very bullish to me.  The first is Costco (COST).  Basing patterns that finally breakout can lead to months or years of solid gains so I'm looking for COST to outperform the NDX in the foreseeable future.  Take a look at the chart:

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February Has Sent This Stock Higher 95% Of The Time Over The Last Two Decades

Market Recap for Monday, February 13, 2017

Recent leadership from financials (XLF, +1.14%) and industrials (XLI, +1.00%) appears to be resuming as these two groups led the benchmark S&P 500 to fresh all-time highs on Monday.  The last week has been very strong for U.S. equities and it's very bullish to watch industrials (+2.62% over the past week), consumer discretionary (XLY, +1.89%) and financials (XLF, +1.86%) lead the march higher.  While you might be upset that technology is not among the leaders, you really shouldn't fret.  History tells us that technology does not lead the stock market in the February to April time frame.  Check out the following seasonality chart that shows relative weakness in the XLK vs. the benchmark S&P 500:

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Aerospace Strength Sends Industrials To All-Time High

Market Recap for Friday, February 10, 2017

Materials (XLB, +0.91%) and industrials (XLI, +0.79%) led yet another rally in U.S. equities on Friday as the Dow Jones, S&P 500, NASDAQ, NASDAQ 100 and the Russell 2000 all established new all-time closing highs.  The small cap Russell 2000 index ($RUT) performed best on Friday, and had a final thrust higher at the very end of Friday's session to fractionally clear its all-time high.  Check it out:

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This Financial Industry Group Is Poised For A Big 2017

Special Note

Greg Schnell (author of The Canadian Technician blog) and I will be co-hosting a special webinar tomorrow at 11am EST.  I'll discuss trading strategies with respect to gaps created by earnings reports while Greg's discussion will focus on his outlook for biotech stocks.  Greg will also cover the huge advantages of creating ChartLists to organize your stock trading.  It should be very educational and informative and we'd love to have you join us.  It is a members only webinar, though, so if you're not a member, it's a great time to sign up for a 10 day FREE trial to gain access to the webinar and join us in the morning.

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