Trading Places with Tom Bowley

Transportation Services Ready To Breakout, Ryder Trucking Along

Market Recap for Wednesday, July 26, 2017

The small cap Russell 2000 index struggled, finishing down 0.56% on Wednesday's session, but it was another day of record high closes elsewhere as the Dow Jones, S&P 500 and NASDAQ all advanced.  The FOMC provided its latest policy statement at 2pm EST yesterday, but after some brief weakness, our major indices recovered and the move to new highs was underway.

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Copper And Oil Surge; Materials Among Leaders

Market Recap for Tuesday, July 25, 2017

Energy shares (XLE, +1.26%) received another boost when crude oil prices ($WTIC) surged on Tuesday to close at $47.89 per barrel (+3.34%), its highest close in nearly two months.  While the crude oil spike extends a very nice rally off its triple bottom low in June, the XLE has yet to break the steep downtrend that it's been mired in during 2017.  Here's a current chart of both the WTIC and XLE:

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Banks Bounce Off Support, Financials Lead

Market Recap for Monday, July 24, 2017

It was another bifurcated session as the more aggressive NASDAQ and Russell 2000 led while the Dow Jones and S&P 500 took a breather.  That's been the theme of late and as long as the more aggressive indices lead, it's a good sign for equities.  Another good sign for equities is that Friday's close on the Volatility Index ($VIX) at 9.36 marked the second lowest reading on record, surpassed only by the December 23, 1993 close of 9.31.  Extreme complacency suggests to me that the market is prepared to withstand bad news and does NOT represent the type of environment where major corrections or bear markets begin.

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U.S. Stocks Finish A Strong Week With A Flat Friday

Market Recap for Friday, July 21, 2017

Friday was definitely a boring kind of day, but the bulls will generally take boring - especially after a nice push higher and a huge slate of earnings about to be released this week.  While all of our major indices finished Friday on the negative side, only the Dow Jones was unable to finish the week higher.  The NASDAQ was the leader last week, rising more than 1%, but even this index struggled the second half of the week, battling a 60 minute negative divergence.  Here's the visual:

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Coal And Renewable Energy Surge To Lead U.S. Equities To Fresh Highs

Market Recap for Wednesday, July 19, 2017

Energy (XLE, +1.46%) and materials (XLB, +0.96%) led the major U.S. indices to all-time highs on Wednesday, with particular strength in coal ($DJUSCL) and renewable energy ($DWCREE), which rose 6.36% and 3.08%, respectively.  The former's strength comes on the heels of a bottoming head & shoulders breakout as reflected below:

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Internet Stocks Break Out, Lead Technology And NASDAQ

Market Recap for Tuesday, July 18, 2017

It was a rough June for technology stocks and, more specifically, internet stocks ($DJUSNS), but they've both rebounding during an exceptional July.  It appears that traders have re-entered this space in anticipation of very strong upcoming quarterly earnings reports.  It's been several weeks since I could say this, but the DJUSNS closed at an all-time high on Tuesday, prompting leadership in technology (XLK, +0.46%).  The following perfectly illustrates why you do NOT trade topping patterns during a bull market.

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Small Stocks Close At Fresh All-Time High

Market Recap for Monday, July 17, 2017

It seems that every major U.S. index is taking its turn at all-time highs and on Monday small cap stocks stepped up to the plate, closing at 1431.60, its highest close ever.  It's interesting because it did so on a day when late day selling spoiled what would have been all-time highs for both the Dow Jones and S&P 500.  It's also very interesting because this fresh high occurred in July, historically the start of very poor action for small caps as their summer performance is typically much weaker than the other major indices.  For instance, over the past 20 years, the S&P 500 has outperformed the small cap Russell 2000 index by an average of 1.2% during the calendar month of July.  It's the start of a three consecutive month period where small cap stocks are trashed.  Here are the average monthly returns for the Russell 2000 since 1998:

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Long Awaited Bank Earnings Were A Dud.....Or Were They?

Market Recap for Friday, July 14, 2017

JPMorgan (JPM), Citigroup (C), PNC Financial (PNC) and Wells Fargo (WFC) were a formidable sample of bank stocks ($DJUSBK) reporting earnings last Friday and it was set up to be a very interesting trading day - to see if the huge run up in the DJUSBK was justified.  JPM, C and PNC all reported beats on both their top and bottom lines.  WFC beat its EPS expectations.  But the DJUSBK fell nearly 1% and was a primary reason why financials (XLF, -0.44%) was the only sector to finish Friday's action in negative territory.  What gives?  Well, there's a very old and wise Wall Street adage that says "buy on the rumor, sell on the news".  The DJUSBK rose from just below 390 to just above 430 from early June to early July.  Huge expectations were already built into bank stocks as traders anticipated great results.  After receiving exactly what they expected, and with nice profits in hand, astute traders sold on the news.  The most important aspect, as far as I'm concerned, is whether technical support levels held on the profit taking.....and they did.  Here's the chart:

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Large Banks Kick Off Earnings Season

Market Recap for Thursday, July 13, 2017

Financials (XLF, +0.60%) rebounded to lead the market action on Thursday, in anticipation of large bank earnings scheduled to be reported this morning.  The Dow Jones U.S. Banks Index ($DJUSBK) remains in a strong technical pattern, but has room to the downside in the event that reported results or guidance is below expectations.  Here's the current chart:

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Equities Surge On Dovish Fed Remarks

Market Recap for Wednesday, July 13, 2017

Fed Chair Janet Yellen provided the Fed's semiannual monetary policy to the House Financial Services Committee on Wednesday morning, just prior to the opening of the stock market and both the bond market and stock market loved what it heard.  The Fed Chair sounded very accommodative and dovish in her remarks and bond prices immediately rose.  An hour later, the S&P 500 followed suit, gapping higher and never looking back.

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Financials Hit Resistance And Weaken As Yields Fall

Market Recap for Tuesday, July 11, 2017

Only two of nine sectors - energy (XLE, +0.54%) and technology (XLK, +0.22%) were able to finish in positive territory on Tuesday.  Given that overall weakness, it was interesting to see that only one of our major indices lost ground (S&P 500 down less than 2 points).  Financials (XLF, -0.88%) saw some profit taking to hold back that benchmark S&P 500 index ($SPX):

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Technology Rebound Strengthens With Internet Stocks Hitting Key Level

Market Recap for Monday, July 10, 2017

The NASDAQ and S&P 500 rallied on Monday, posting gains of 0.38% and 0.09%, respectively.  The small cap Russell 2000 index was easily the worst performing major index, losing 0.52% on the session.  Despite the weakness, the Russell 2000 still remains on the cusp of a very significant breakout after consolidating for months. Here's the chart:

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Homebuilders Strong; Dow Component McBreaks Out

Market Recap for Friday, July 7, 2017

Dow Jones component McDonalds Corp (MCD) jumped more than 2% on Friday, extending an already strong 2017 with another all-time high closing breakout.  It helped to lead a strong restaurants & bars ($DJUSRU) industry, which rose 1.26%.  That, in turn, helped the consumer discretionary sector (XLY, +0.89%) post nice Friday returns after a dismal 4-5 week stretch.  Here's how all three look after the close last week:

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