Trading Places with Tom Bowley

Transports Soar To Lift Wall Street To Yet Another Record

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Special Note

I am on vacation this week so I'll post mostly abbreviated blog articles.  There will be no blog article on Friday morning.

Market Recap for Friday, July 12, 2019

Industrials (XLI, +1.75%) powered our major indices to fresh new all-time highs.  Transports ($TRAN) were particularly strong as truckers ($DJUSTK, +4.51%), airlines ($DJUSAR, +1.79%), and railroads ($DJUSRR, +1.58%) all had solid days.  The DJUSAR broke to a new 2019 high:


Last Tuesday, I had posted the above chart showing the key price resistance.  Yesterday's big advance cleared that resistance, a very big positive for transports.

Meanwhile, healthcare (XLV, -1.11%) lagged badly as both pharmaceuticals ($DJUSPR, -2.15%) and biotechs ($DJUSBT, -1.73%) stumbled on Friday.  The latter group was hurt by Illumina (ILMN, -16.12%), which warned about its upcoming Q2 earnings and then lowered its outlook for the balance of the year.  ILMN had been a leader among biotech stocks.  Seeing a leader produce such a weak outlook is not what this group was looking for during its most bullish calendar month historically.

Pre-Market Action

Much can change between this evening and tomorrow morning, but U.S. futures are pointing to a slightly lower open.  Dow Jones futures are currently lower by 36 points with a bit less than 12 hours to tomorrow's opening bell.

Current Outlook

The S&P 500 remains in the up channel that I illustrated last week.  Here's a refresh of the chart included in Trading Places:

If we get a test of the upper channel line early this week, it could signal the start of a brief period of consolidation.

Sector/Industry Watch

Transports ($TRAN) broke out from a bottoming reverse head & shoulders pattern on Friday:

That's good news as a strong transportation group usually coincides with a major stock market advance.  One day of bullish behavior doesn't make a major trend, but given how weak this area has been, it's a very nice start.

Historical Tendencies

The S&P 500 has produced the following annualized returns within the month of July since 1950:

July 1-17:  +24.70%
July 18-24:  -18.72%
July 25-31:  +19.12%

Key Earnings Reports

(actual vs. estimate):

C:  1.78 - estimate

(reports after close, estimate provided):

JBHT:  1.35

WTFC:  1.65

Key Economic Reports

July empire state manufacturing survey to be released at 8:30am EST:  +0.5% (estimate)

Happy trading!

Tom

Tom Bowley
About the author: co-founded Invested Central in 2004 and served as the site's Chief Market Strategist for more than 10 years. Invested Central provides stock market education and guidance for those interested in making their own financial decisions. During his tenure at Invested Central, Tom co-hosted Market Open LIVE, a national radio broadcast that covered many of the largest markets across the U.S. In addition, he has spoken at various conferences throughout the United States and Canada and has taught thousands of traders across the globe how to trade equities more wisely with an emphasis on managing risk and intermarket relationships. Learn More
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