Trading Places with Tom Bowley

Dow Jones Soars 300 Points, Breaks 21000; FTSE Very Bullish

Market Recap for Wednesday, March 1, 2017

U.S. equities surged on Wednesday, with the Dow Jones and S&P 500 gaining 1.46% and 1.37%, respectively.  The small cap Russell 2000 rebounded big time after its Tuesday drubbing, spiking 27 points, or 1.94%, to 1413 - an all-time high close.  It wasn't just a U.S. rally, however, as global markets exploded higher, particularly in Europe where both the London Financial Times ($FTSE) continued its recent breakout after a multi-decade consolidation period.  If the following chart doesn't excite you, I'm not sure what will:

Continue reading "Dow Jones Soars 300 Points, Breaks 21000; FTSE Very Bullish" »

Overbought Aggressive Sectors Lead Decline In U.S. Equities

Market Recap for Tuesday, February 28, 2017

It was a day of profit taking on Tuesday.  All of our major indices declined, although the selling was certainly contained.  The S&P 500, for instance, dropped just 0.26% and remains near its all-time high.  Weakness in consumer discretionary (XLY, -0.75%), technology (XLK, -0.48%) and industrials (XLI, -0.41%) led to a much steeper drop in the more aggressive NASDAQ (-0.62%) and especially the small cap Russell 2000 (-1.51%).  The XLY, XLK and XLI are all very overbought on their respective weekly charts so a period of weakness would not be too alarming.  The fall in small cap shares is a bit more concerning, however, as yesterday's close of 1386 was slightly below its 20 day EMA, currently at 1388.  Furthermore, the Russell 2000 is the only major U.S. index that currently is reflecting a negative divergence on its weekly chart.  Check it out:

Continue reading "Overbought Aggressive Sectors Lead Decline In U.S. Equities" »

History Suggests Energy, Financials And Industrials Are Poised To Lead U.S. Stocks

Market Recap for Monday, February 27, 2017

Energy (XLE, +0.86%) led the market advance on Monday and that hasn't happened much over the past few months.  But as I have shown below in the Sector/Industry Watch section, I believe there are several technical signs that we could have witnessed (or be in the process of witnessing) a very significant bottom being set.  The XLE is also the best performing sector ETF during the calendar months of March and April over the past two decades.  Tomorrow marks the beginning of March so we'll soon find out whether historical trends begin to kick in.

Continue reading "History Suggests Energy, Financials And Industrials Are Poised To Lead U.S. Stocks" »

Utilities Taking Advantage Of Tumbling Treasury Yields

Market Recap for Friday, February 24, 2017

The 10 year treasury yield ($TNX) tumbled 7 basis points on Friday and that continued the recent string of solid days for utilities (XLU, +1.52%).   Healthcare (XLV, +0.48%) is also benefiting from the rotation to defensive areas of the market as the XLV has been the best performing sector over the last 30 days with a gain of 8.27%.  Utilities aren't far behind, gaining 6.63% over that span.  The XLV could run into price resistance difficulties, however, as it's nearing its August 2016 closing high of 75.06.  Take a look:

Continue reading "Utilities Taking Advantage Of Tumbling Treasury Yields" »

Lessons To Be Learned From A Consolidating Industry Group (Tires)

Market Recap for Thursday, February 23, 2017

The action on Thursday was not bullish at all.  Yes, the Dow Jones and S&P 500 rose again with the Dow setting another all-time high.  Great action, right?  Wrong.  The more aggressive NASDAQ and Russell 2000 both fell again by .43% and .66%, respectively, and that's unfortunately been the pattern of late.  The stock market moving higher - or attempting to move higher - with leadership coming from defense.

Continue reading "Lessons To Be Learned From A Consolidating Industry Group (Tires)" »

Commodity Chemicals Break Out Again, Look Very Bullish

Market Recap for Wednesday, February 22, 2017

Utilities (XLU, +0.42%) showed relative strength again on Wednesday, leading the charge on an otherwise bifurcated kinda day.  The Dow Jones was able to finish the session with a gain, but the benchmark S&P 500, NASDAQ and Russell 2000 were all noticeably weaker, especially the latter as small caps lagged with a 0.46% decline.

Continue reading "Commodity Chemicals Break Out Again, Look Very Bullish" »

Warning Signs Beginning To Emerge

Market Recap for Tuesday, February 21, 2017

Our major indices saw another solid day of gains with the Dow Jones, S&P 500, NASDAQ, NASDAQ 100 and Russell 2000 all breaking out to all-time highs once again.  All nine sectors advanced and small caps led on a relative basis.  But that's about where the positive "beneath the surface" signals ended.  I've detailed some warning signs below in both the Current Outlook and Sector/Industry Watch sections.  I'm not bearish, but action that's developed over the past few weeks needs to be monitored closely as we move through the next few weeks.

Continue reading "Warning Signs Beginning To Emerge" »

Will Homebuilders Finally Make Their Breakout?

Market Recap for Thursday, February 16, 2017

U.S. indices finished in bifurcated fashion on Thursday as the Dow Jones logged gains, the S&P 500 finished flat and the NASDAQ and Russell 2000 both finished with minor losses.  We could see some additional weakness in coming days based on very overbought conditions and historical bearishness during the upcoming week in February.  More on that below.

Continue reading "Will Homebuilders Finally Make Their Breakout?" »

Is The Market Topping? Relative Sector Performance Says NO WAY!

Market Recap for Wednesday, February 15, 2017

Healthcare (XLV, +1.08%) resumed its leadership role but relative performance in this sector has been quite weak since the summer.  Below is a chart that shows a ratio of the XLV to the S&P 500.  If you've been buying and holding this sector, you've experienced underperformance and that's not unusual during bull markets.  Since August 1, 2015, the XLV is down just slightly on an absolute basis, but on a relative basis it's been very weak.  Check it out:

Continue reading "Is The Market Topping? Relative Sector Performance Says NO WAY!" »