Trading Places with Tom Bowley

Energy And Financials Fuel Rally As 10 Year Treasury Yield Breaks Out

Market Recap for Monday, July 3, 2017

Energy (XLE, +1.93%) had another strong day as crude oil ($WTIC) surged above $47 per barrel and tested its 50 day SMA for the first time in over a month.  The XLE has overhead resistance issues using multiple time frames, the first of which is featured below on its daily chart:

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Industrials Lead Friday's Action But Market Bifurcated

Market Recap for Friday, June 30, 2017

We once again witnessed market bifurcation with both the Dow Jones and S&P 500 rising slightly, while the more aggressive NASDAQ and Russell 2000 finished with absolute and relative weakness.  The Dow Jones received a big lift from Nike (NKE), which blew away earnings estimates, and Caterpillar (CAT) as CAT moved higher to test its mid-June high at 108.

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Give Me Financials.....Or Give Me Breadth

Market Recap for Thursday, June 29, 2017

That's exactly what it's felt like recently.  Financials (XLF) have easily been the best performing sector over the past week, rising nearly 3%, while energy (XLE) is the only other sector in positive territory as crude oil ($WTIC) has spiked from $42 per barrel price support to test (and fail at) its declining 20 day EMA just above $45 per barrel.  Here's a look at both crude and the XLE:

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Rising Treasury Yields Lift Banks, Financials

Market Recap for Wednesday, June 28, 2017

All of our major indices finished higher on Wednesday with the small cap Russell 2000 and tech-laden NASDAQ indices leading the charge with 1.55% and 1.43% gains, respectively.  We saw solid participation across the board, however, with the Dow Jones ending the session just 75 points from an all-time high close.

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S&P 500 Loses 20 Day EMA Support As Second Shoe Drops In Technology

Market Recap for Tuesday, June 27, 2017

The relative sector leader for over a year - technology (XLK, -1.64%) - took another beating on Tuesday as selling ramped up for a second consecutive session.  All industry groups within technology took a hit, but semiconductors ($DJUSSC) and internet stocks ($DJUSNS) took the biggest hits with the former losing its 50 day SMA support for the first time since mid-April.  A more significant level, however, is its longer-term, rising 20 week EMA support, which hasn't been lost since May 2016.  Check out this chart:

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Extremely Low VIX Still Paints Bullish Picture

Market Recap for Monday, June 26, 2017

The Volatility Index ($VIX) is a signal of what the market expects in terms of volatility over the near-term (1 to 2 months).  While some look at the current reading below 10 as a signal of extreme complacency that will result in a lot of selling ahead, I don't view it that way at all.  I believe low VIX readings tell us that the market can handle bad news without batting an eye.  Perhaps we'll see knee-jerk reactions and short-term selling, but that will only set up short-term buying opportunities.  If you study the stock market's history, you'll find that bear markets begin when the VIX is elevated and market participants are more fearful.  That's where significant price damage can occur.  Right now, the VIX is near recent lows and I think tells us to keep our money on the long side.  Check out the current reading:

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Crude Oil Bounces Off $42 Support, Energy Rebounds

Market Recap for Friday, June 23, 2017

It's been a rough ride for crude oil ($WTIC) over the past several months and the steady march lower has taken oil back to test its November low just above $42 per barrel.  It hasn't been a robust advance since touching support, but it's been a bounce nonetheless and the bulls will be trying to hold onto that support.  Here's a visual:

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Biotechs Explode, Send Healthcare To Leadership Role; Energy Runs Out Of Fuel

Market Recap for Wednesday, June 21, 2017

Biotechs ($DJUSBT) are the "semiconductors of healthcare".  When they move, they move!  Healthcare (XLV, +1.27%) was easily the best performing sector on Wednesday as the DJUSBT soared 3.43%.  Unless we see a major reversal between today and tomorrow, we'll have a very significant breakout on the weekly chart.  Here's the visual:

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Biotechs Breakout, Lead Healthcare Stocks Higher

Market Recap for Tuesday, June 20, 2017

Healthcare (XLV, +0.33%) was one of just two sectors - utilities (XLU, +0.06%) was the other - to rise on Tuesday as much of Monday's gains was relinquished.  The good news, however, is that biotechs ($DJUSBT) made a significant breakout on Tuesday and that bodes well for the group over the next couple months.  History won't hurt the group either - check out the Historical Tendencies section below.  Here's a five year weekly chart showing the significance of this move above 1800:

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