Trading Places with Tom Bowley

Specialty Retailers Rally Off Support, Lead U.S. Stocks To Record Close

Market Recap for Thursday, May 25, 2017

Retailers led another U.S. market rally on Thursday and helped provide leadership for the consumer discretionary sector (XLY, +0.88%), which outperformed the benchmark S&P 500 for one of the few times over the past 2-3 weeks.  There had been previous slowing momentum in place on the XLY:$SPX ratio and it was literally resolved earlier this week, just before relative strength resumed today.  Take a look at this relative chart:

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S&P 500 Breaks To Another Fresh All-Time High

Market Recap for Wednesday, May 24, 2017

Seven of nine sectors finished higher to lead the S&P 500 to a record high close on Wednesday.  Materials (XLB, +0.67%) and utilities (XLU, +0.57%) led the advance as gold mining ($DJUSPM) and mining ($DJUSMG) both performed extremely well, rising 1.58% and 1.20%, respectively.  Steel ($DJUSST) was one of two industry groups in the materials sector to finish lower, failing to hold a breakout above its declining 20 day EMA.  The DJUSST could be set up for further losses unless we can establish a close back above that key moving average.

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Financials Lead As Banks Rally Amid Rising Treasury Yields

Market Recap for Tuesday, May 23, 2017

Eight of nine sectors finished in positive territory on Tuesday as only consumer discretionary (XLY, -0.38%) failed to do so.  18 of 23 industry groups within the discretionary sector finished lower, with retail and home construction stocks clearly the weakest links.  After gapping higher initially on a strong quarterly earnings report from Toll Brothers (TOL), the home construction index ($DJUSHB) tumbled following a disappointing April new home sales report that was released at 10am EST.  The selling continued throughout the session.  However, the good news is that I expect to see short-term selling only down to test rising 20 day EMA support as momentum remains quite strong on the daily chart.  Here's the visual:

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Industrial Suppliers Continue Impressive Bounce Off Support

Market Recap for Monday, May 22, 2017

Utilities (XLU, +0.86%), technology (XLK, +0.80%) and industrials (XLI, +0.77%) were the sector leaders on Monday, aiding our major indices as they mostly have erased the big losses from last Wednesday.  The XLI has been a leader of late and is threatening an absolute price breakout and its highest relative close (vs. the S&P 500) since December.  Here's the visual:

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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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