Trading Places with Tom Bowley

Stocks Rebound On The Strength Of Industrials

Market Recap for Friday, May 19, 2017

Industrials (XLI, +1.32%) and energy (XLE, +1.23%) were the two clear leaders on Friday.  The XLI represents one of the four aggressive sectors in the market so it's always nice to see strength there.  Commercial vehicles ($DJUSHR) had a huge day, rising more than 3% and are featured below in the Sector/Industry Watch.  While the XLE was strong, one of the key areas - pipelines ($DJUSPL) - lagged and could pose problems for two reasons.  First, there are technical issues which are illustrated below:

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Stocks Rebound, This Relative Ratio Will Be Important To Watch

Market Recap for Thursday, May 18, 2017

Technology (XLK, +0.59%) and consumer discretionary (XLY, +0.58%) led the market's rally on Thursday after mobile telecom ($DJUSWC) managed to hang onto 20 week EMA support after a drubbing on Wednesday.  The bad news is that there remains an ugly negative divergence on its weekly chart that still needs to be resolved.  Check it out:

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Major Indices Sell Off Hard, Lose Support; What's Next?

Market Recap for Wednesday, May 17, 2017

It was a brutal day of selling for U.S. equities.  The selling began at the open and continued right through the close.  The selling also cleared price support levels and that likely will result in further selling in the days and possibly weeks ahead.  The NASDAQ has been the undisputed leader among the major U.S. indices and that index failed to hold rising 20 day EMA support despite a fairly strong MACD.  Take a look at the chart and possible short-term scenarios:

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Negative Divergences Weighing On Transports

Market Recap for Tuesday, May 16, 2017

Technology (XLK, +0.47%) and financials (XLF, +0.29%) were the two best performing sectors on Tuesday and the former was the primary reason that the NASDAQ was able to outperform on a day when the U.S. market was bifurcated.  The Dow Jones and S&P 500 both started the day with very strong gains before reversing and finishing slightly lower on the session.

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S&P 500 Sets Fresh Record High Close; Materials And Energy Lead

Market Recap for Monday, May 15, 2017

It was another solid day for U.S. equities with index leadership coming from the small caps as the Russell 2000 posted a nice 0.81% rise while the other major indices were just below the +0.50% level.  Monday marked only the fourth time this month that the Russell 2000 has outperformed the S&P 500, which is a bit unusual.  May, and especially June, tends to see outperformance by small cap stocks as you can see from the seasonality chart below:

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NASDAQ Leads Bifurcated U.S. Market

Market Recap for Friday, May 12, 2017

The NASDAQ finished higher on Friday, but that was not the case for the Dow Jones and S&P 500, which both finished fractionally lower.  The Russell 2000 was hit hardest as this small cap index again threatened a short-term breakdown beneath 1380.  It managed to hold that intraday support level, but did close at its lowest level in nearly four weeks.  The Russell 2000's relative strength in April vs. the benchmark S&P 500 has completely vanished and we've been seeing a lot of relative weakness in May.  So while the Russell 2000 attempts to hold onto its 1380 price support, it also needs to outperform the S&P 500 to hold onto the relative support established in the latter part of March, as highlighted below:

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Rotation Turns Defensive As S&P 500 Consolidation Continues

Market Recap for Thursday, May 11, 2017

Consumer staples (XLP, +0.15%) and utilities (XLU, +0.14%) were beneficiaries of money rotating more defensively on Thursday.  While the end result at the close wasn't bad overall (the Dow Jones and S&P 500 lost 0.11% and 0.22%, respectively), the losses earlier in the session were as significant as any we've had in nearly a month.  The Volatility Index ($VIX) was up approximately 10% at the S&P 500's intraday low as you can see below:

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A Deep Look Into Healthcare And Its Bullish Pattern

Market Recap for Wednesday, May 10, 2017

The energy sector (XLE, +1.32%) was very strong on Wednesday as crude oil ($WTIC) bounced more than 3%.  With crude oil up nicely again this morning, we should see more strength and leadership from the XLE today.  Technology (XLK, +0.38%) and financials (XLF, +0.34%).  Leading technology was the semiconductor space, which powered forward to yet another breakout.  While nothing seems to slow this industry group, just be aware of a nasty negative divergence present on its weekly chart.  Check it out:

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Hotels And Gambling Stocks Lead Strong Discretionary Sector

Market Recap for Tuesday, May 9, 2017

Consumer discretionary stocks (XLY, +0.58%) were easily the leading group on Tuesday as hotels ($DJUSLG) and gambling ($DJUSCA) stocks were outperformers.  Automobiles ($DJUSAU), recreational products ($DJUSRP) and home construction ($DJUSHB) also performed quite well.  The latter group held recent price support and yesterday cleared both its 20 and 50 day moving averages.  I'd expect more leadership from home construction.  Here's the chart:

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Truckers: Short-Term Sell Signal Setting Up Long-Term Buy

Market Recap for Monday, May 8, 2017

The small cap Russell 2000 lagged on Monday with the other major indices tacking on minor gains.  Energy (XLE, +0.71%) was the leader with coal ($DJUSCL) jumping 3.50%.  The DJUSCL, however, is hitting major trendline resistance after kick-saving at price support.  Take a look at the chart:

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Dow Jones Tops 21000 For Second Time

Market Recap for Friday, May 5, 2017

The headline news from Friday is that the Dow Jones was able to clear psychological overhead resistance at 21000 for only the second time in history (March 1st was the other) and that the S&P 500 managed to clear its all-time high close at 2396.  The S&P 500 technical picture is addressed below in the Current Outlook section so let's focus here on the Dow Jones.  Despite the close above 21000, the Dow Jones still fell short of its all-time high close of 21115 from March 1st.  Check it out:

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Bifurcated Action Stymies Global Markets - For At Least One Day

Market Recap for Thursday, May 4, 2017

Happy Cinco De Mayo!

Cuatro De Mayo turned out to be a very flat day, with bifurcated action throughout the market.  Even global markets were bifurcated.  I counted 13 international ETFs higher yesterday with 10 lower.  Markets everywhere are consolidating after mostly higher moves.  The rotation and continuation patterns that are evolving remain quite bullish in my view.  Here's an example:

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