STTG Market Recap June 2, 2014

A perfect day for the bulls as the indexes rested by going sideways.  Going sideways to digest large gains is a much more healthy situation than falling back to lose 40-60-80% of recent gains.  Further an early morning dip was bought aggressively which is also bullish action.  So the change in complexion that started nearly 2 weeks ago remains in place.  The S&P 500 gained 0.07% while the NASDAQ fell 0.13%.  There was a weird hiccup today with a key manufacturing report where it was incorrectly reported earlier in the day:

The ISM said its index of national factory activity rose to 55.4 last month from 54.9 in April, with the May figure just shy of the 55.5 expected by a Reuters poll of economists. The ISM had initially said the reading came in at 53.2, but it was corrected due to an error in applying the seasonal adjustments.

The S&P 500 continues to sniff along the top of this resistance area in purple.  The NASDAQ was wildly overbought middle of last week and has now spent a few days consolidating in a positive manner.

spx

nasdaq

We mentioned last week that the NASDAQ was extremely overbought via the NASDAQ McClellan Oscillator when we saw readings in the 60s(!).  Now that has been worked off with little damage to the NASDAQ, just a healthy consolidation.

namo

We’ve been talking about 10 year Treasury yields and how they fell below a key level of support last week – today yields bounced back strongly… it would “feel” better if they got back over the 2nd dotted line.   Staying over 2.60% would feel more comfortable with a market at record highs.

tnx

These transportation stocks are just amazing right now.

tran

Airlines – after being horrid investments for decades, continue to be a major bull market for the past 24 months or so after massive consolidation in the industry – and those baggage fees generating billions.

aal

Random stock of day with impervious chart – US Silica (SLCA).   A very simple company that primarily deals with …well silica.

U.S. Silica Holdings is one of the largest domestic producers of commercial silica, a specialized mineral that is a critical input into the oil and gas proppants end market.  The company also processes ground and unground silica sand for a variety of industrial and specialty products end markets such as glass, fiberglass, foundry molds, municipal filtration and recreational uses.

slca

The first week of the month is very heavy with economic data as we have ISM Services and Friday’s employment data but right now anything bad is being looked at as due to weather and the bulls seem to have regained momentum in the past 2 weeks.

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