For the first time in 3 weeks a morning selloff did not lead to the immediate entrance of a flood of dip buyers. This morning early selling just led to more selling later as a very short term overbought market finally saw significant selling. Some turmoil in Iraq was a catalyst for the market to take a breather:
Crude spiked on worry of supply disruptions amid a Sunni militant uprising in Iraq that had rebels controlling two cities and the Wall Street Journal reporting that Iran was sending elite troops to help the Iraqi government fight the rebellion. President Barack Obama said he would not rule out the use of airstrikes to help Iraq’s government.
On the economic side of things retail sales also came in light:
The Commerce Department said that retail sales gained 0.3 percent. While that was below the 0.6 percent rise expected on Wall Street, April sales were revised higher to show a 0.5 percent increase.
After breaking over our upper resistance area for a few days we wondered if the S&P 500 was in some sort of new hyper bullish move, but we’ve come back into this trading range. The NASDAQ which was short term overbought to the point not seen before in over 2 years via the NASDAQ McClellan Oscillator a few days ago retreated back to its 10 day moving average.
Here is that oscillator for the NASDAQ – down from the 60s to teens in short order.
Oil spiked over a level it has had trouble with repeatedly the past half year.
The rise in oil hit transport stocks particularly hard – this group was in the stratosphere of late.
Shares of Lululemon Athletica (LULU) dropped to a more-than three year low after the Canadian yogawear retailer reduced its revenue and earnings forecast for the fiscal year and said its CFO would retire early next year. This was once one of the market’s major momentum stocks.