STTG Market Recap May 20, 2014

In yesterday’s recap we wrote:

The NASDAQ is back to a key area – that downtrend line than connects highs of the past few months; the last visit here led to an immediate rejection.  If you are bearish you can place a short against the index in this general area with a top above the trend line.

This is the benefit of technical analysis – it shows you patterns and probability.  Of course it is no guarantee but you had a low risk trade as of yesterday’s closing action as the NASDAQ was hitting an area it has been rejected at.  One time it will stop being rejected at a similar area and the trade won’t work but until then you respect the pattern.  Today indexes opened badly and sold off throughout the session until a late day rally reduced losses.  The S&P 500 fell 0.65% and the NASDAQ 0.70%.  A bad data point out of Caterpillar and some bad earnings data out of a bunch of retailers hurt the market.

Here is that NASDAQ rejection and resistance we pointed out yesterday.

nasdaq

spx

Continue to watch 10 year Treasury yields – any breaking of that bottom dotted line and people will start to wring their hands.

tnx

Apple (AAPL) avoided today’s NASDAQ selling which was impressive – it looks like it wants to break out here, but it needs the market’s cooperation.

aapl

Home Depot (HD) reported first-quarter earnings below estimates, with the spring selling season off to a slow start after a harsh winter in many parts of the nation. Shares of the company gained, however, as it hiked its full-year earnings forecast and said it intends to buy back as much as $3.75 billion additional shares this year.  Overall, this is not a very inspiring chart.

hd

Also in retail, TJX (TJX) fell after the owner of off-price chain stores TJ Maxx and Marshalls reported lower-than-expected quarterly revenue.

tjx

Dick’s Sporting Goods (DKS) estimated current-quarter earnings way below analysts’ average estimate and cut its full-year 2014 adjusted earnings and same-store sales growth forecasts due to weak demand for its golf and hunting products.

dks

Caterpillar (CAT) disclosed in a regulatory filing that total retail sales of machines in the three-month rolling period that ended in April were off 13 percent.   This was a chart showing nice relative strength versus the market but when news comes out of the blue like this the chart won’t matter much.

cat

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