STTG Market Recap May 28, 2014

Today was a perfectly healthy session for a market that has changed complexion over the past week.  We said numerous times in yesterday’s recap we could stand a day or two of rest after a hectic move up, especially in the NASDAQ.  The S&P 500 fell 0.11% and NASDAQ 0.28% – these are reasonable pullbacks.   There was a sharp drop in the yield of the 10 year that continues to be an issue – but today the market ignored it, surprisingly.   Gold also had a bad day – more on that later.

Here are the longer term charts for the indexes:

spx

nasdaq

Ten year yields broke a key level and I was incorrect in thinking it would cause a lot of consternation.  Generally when yields fall like this it doesn’t say great things about the economy as people bid up the price of bonds (and hence drive down their yields).  So a strange dichotomy right now.

tnx

Gold fell out of the bottom of a triangle – while commodities can be very volatile and don’t always follow technical analysis that well it is interesting to see this happen the same day as Treasuries rally.

gold

Transportation stocks continue to rock and roll but like we said yesterday with the market as a whole – are very short term overbought so could use a day or two of breathing!

tran

We mentioned the reversal in homebuilders last week – today we had a report from Toll Brothers (TOL) – a high end homebuilder and the market approved after the homebuilder reported quarterly profit more than doubled.

tol

On the negative side if you held shares of shoe seller DSW (DSW) going into today you got kicked in the behind – pardon the pun!  The company reported a drop in sales.    Here is a great case of the chart telling you to stay away – it has been in a downtrend for months and unlike a lot of stocks which reversed strongly last week this one actually was falling.  So “someone knew something”.

dsw

 

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