Stock Market Today: June 24th - 28th, 2019

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Trend Analyzer - 6/26/19 - Dow (DIA) Remains Overbought

Stocks broadly declined yesterday, although the Dow (DIA) fared slightly better than the other indices. Only declining 0.71% in yesterday's session—versus a 0.98% decline in the S&P 500 (SPY) and 1.72% loss for the Nasdaq (QQQ)—DIA is now the only major index ETF that is still overbought and the only one to be up from this time last week. All of the other index ETFs have fallen off of overbought levels from the past few weeks and currently sit at neutral. Granted, most of this movement still leaves the ETFs on the border of neutral/overbought so it will not take much upside for a return to overbought. With this fall to neutral, all of these ETFs are also down over the past five days with losses ranging from a very small 1 bp decline for the Core S&P 500 (IVV) to a much more substantial 1.86% loss for the Russell 2000 (IWM). IWM is not alone in large losses though as other small and mid caps also have lost over 1%, also bringing them below the 50-DMA as well.



Recently, there has been a steady rotation into more defensive sectors, but in the past week this picture has become more mixed as the distinction between cyclical/counter-cyclical performance has muddied. The second best performing sector this year has been Real Estate (XLRE) with better than a 20% gain YTD but in the past week, XLRE has underperformed dramatically losing 1.72%. After sitting at extremely overbought levels last week, it has fallen sharply in its trading range and is now neutral like six other sectors. While no other sector experienced quite as large of a decline, there are four other sectors (all cyclicals) that are lower versus last week including Financials (XLF), Communication Services (XLC), Consumer Discretionary (XLY), and Technology (XLK). Each of these also sits in neutral territory along with Industrials (XLI) and Energy (XLE). XLE has been the only sector ETF to sit below the 50-DMA recently, and given this more oversold level, the sector has begun to be bought up rising 1.1% in the past week. While XLRE has fallen, there is a disconnect with other defensives—Utilities (XLU), Staples (XLP), and Health Care (XLV)—which have done well. XLU, XLP, and XLV in addition to Materials (XLB) have all outperformed the other sectors in the past week. Additionally, these four are the only sectors that have become overbought with XLV sitting just below extreme levels.



SOX Catching a Case of the "Quitters"

Whenever old socks start to lose some of their elasticity and won't stay up anymore, they're called quitters, and looking at a recent chart of the Philadelphia Semiconductors Index, otherwise known as the SOX, it too seems to have come down with a case of the quitters. Ever since initially falling below its 50-day moving average back on May 13th, bulls have made multiple attempts to pull up the SOX, but each time gravity has taken over. This morning's rally in the semiconductor space, driven by Micron's (MU) earnings report, marks the 4th attempt by the SOX to retake its 50-DMA in the last six weeks, but that early strength has given way to some modest profit-taking. There's still a lot of time left in the trading day, though, and breadth for the semis is very strong today. Therefore, there's still a chance that the group manages to rally back to its earlier highs, but a fourth unsuccessful attempt wouldn't be very encouraging.

 

@Stan good stuff thx for sharing and good to have you here

 

haha, it seems we can't quite break through the ATHs with conviction (yet)...we seem to always print a new high (but only by just a couple handles), then pullback/correct, rinse and repeat.

i'm wondering what catalysts can get us to break through this range convincingly (and when i say "range" i mean over 2950 by 50-100 handles ... so SPX 3K basically ). we'll have to see how this g20 meet ends up playing out, i guess we'll get more word by this coming weekend? then we've got ER season beginning from next month. admittedly, i'm not too sure about any upcoming world events that we have, etc. and of course you never know with trump's tweets which always seem to move the markets ... and the FED too obviously can't forget about that lol

absent a black swan event, it seems we could be chopping it up for a while, at least during this traditional "summer doldrums" period