Trading Places with Tom Bowley

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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Bears Grip Wall Street, Key Levels To Watch

Special Announcement

Greg Schnell and I will be co-hosting the latest StockCharts Outlook webinar tomorrow, July 8th at 11am EST.  Please join us as we discuss what went right and wrong during the first half of 2017 and where we see the market heading in the second half.  Have we topped?  Are the bears ready to turn the tables on the bulls and drive prices lower?  Greg and I will debate these questions and others and give you the areas we believe you should be focusing on as the heat of summer kicks in!  First and foremost, this is a FREE webinar for StockCharts.com members.  In order to attend, you must pre-register.  CLICK HERE and then hit the green "Register Here" button to reserve your spot.  Then simply grab your Saturday morning cup of coffee and join us!  We hope to see you there!

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