Trading Places with Tom Bowley

Banks Showing Renewed Strength; ChartCon FINAL CALL

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ChartCon Starts Today!

If you haven't already, I'd highly recommend that you join me and many of my StockCharts.com colleagues from around the globe for ChartCon 2018.  We did our rehearsals and walkthroughs yesterday and my great friend Greg Schnell kicks off the conference in less than an hour, discussing high potential setups.  He'll be followed by many of the world's great technical analysts including John Murphy, Dr. Alexander Elder, Martin Pring and so many others.  We're incredibly excited to get things started today and we'd all love for you to join us.  If you're busy this weekend, no worries!  You'll have video recordings of every session, including the Q&A following every presentation.  You can watch it live or view the recordings over and over and over again!

I cannot stress enough how these two days can transform your financial future.  I've been to every ChartCon, beginning with 2011, and these conferences are the absolute best conferences because world-class technical analysts are excited and willing to share their methodologies and strategies to maximize returns while minimizing risks!

Register NOW before it's too late.....


Market Recap for Thursday, August 9, 2018

Materials (XLB, +0.54%) and utilities (XLU, +0.45%) led another day of bifurcated action on Wall Street.  Energy (XLE, -0.93%), financials (XLF, -0.60%) and industrials (XLI, -0.55%) were on the other side of the sector spectrum.  Technically, all sectors are holding onto key price/trendline/moving average support levels and that should be viewed positively as the U.S. stock market tries to navigate its two weakest calendar months of the year - August and September.

In publishing ($DJUSPB), Dun & Bradstreet (DNB) surged to lead a breakout in the DJUSPB:

DNB gained 15.81% despite reporting quarterly earnings that fell well short of expectations ($1.40 vs $1.50).  The company, however, announced it's being taken private for $5.4 billion.

Pre-Market Action

Asian markets were hit hard overnight and this morning in Europe markets have not improved.  That's leading to lower Dow Jones futures (-110 points at last check) and a drop in the 10 year treasury yield ($TNX) to 2.90%, beneath recent yield support at 2.925%.

Current Outlook

The performance of the Dow Jones U.S. Banks Index ($DJUSBK) is always an important signal for the overall market.  We are a credit-driven society and a healthy banking group technically typically results in a more willing lending environment.  Currently, the DJUSBK looks quite strong:

After consolidating for much of 2018, we appear to be trending higher once again on the DJUSBK.  The weekly PPO also "reset" at its centerline support and note that the weekly RSI hit its key 40-50 support zone during the weakness.  I expect more strength in banks through year end and into 2019.

Sector/Industry Watch

The Dow Jones U.S. Travel & Tourism Index ($DJUSTT) suffered a big drop on Thursday, dragged lower by a poor reaction to Booking Holdings (BKNG, -5.02%) quarterly earnings report.  That drop in BKNG is not unusual this time of year, as explained in the Historical Tendencies section below.  The DJUSTT is hanging onto key price support thus far, aided by a reversing candle after a poor open:

The group may recover, but history says to avoid BKNG until year end.

Historical Tendencies

I've provided the seasonal tendencies for Booking Holdings Inc (BKNG) on numerous occasions.  It's one of the more fascinating historical stories as its performance during the first four calendar months is incredibly bullish while the balance of year is rather uneventful:

January-April:  +34.6%
May-December:  -2.7%

Those returns are averages during the period stated over the past two decades.

Key Earnings Reports

None

Key Economic Reports

July CPI released at 8:30am EST:  +0.2% (actual) vs +0.2% (estimate)

July Core CPI released at 8:30am EST:  +0.2% (actual) vs +0.2% (estimate)

Happy trading!

Tom

Tom Bowley
About the author: 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. Learn More
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