STTG Market Recap July 17, 2014

Indexes were in a light pullback mode until news hit of the Malaysian Airlines crash, which accelerated selling significantly.  At the end of the day the S&P 500 fell 1.18% and the NASDAQ 1.41%.   This was the biggest one day drop for the S&P 500 since early April, as most of the pullbacks this spring came in the NASDAQ not the S&P 500 or Dow Jones.   All the typical knee jerk reactions took place – U.S. Treasuries were bid up, oil and gold spiked, as did volatility etc.  How much of this is real humans trading and how much is just computers trading with each other we will soon see.

With the indexes as we mentioned yesterday we have a nice trend line support on the S&P 500 which is still a bit below us so let’s watch that area.  The NASDAQ did fall below it’s early March highs but again this is due to a news event so let’s see how the next days unfold.

spx nasdaq

The NYSE McClellan Oscillator is now firmly oversold.  As we always say with this indicator one of 2 things happens here – either we have an immediate bounce in the next day or two (the majority of the time), or we see another last wave of selling which pushes this index down to the -90s range (which is far more rare).   So one simple strategy is to apply some cash to the market here if you are a short term trader, but leave some on the sideline in case even greater bargains happen on that second wave.  Then once this oversold condition is resolved, sell those short term holdings.

nymo

The volatility index had a surge for obvious reasons…

vix

Ten year yields fell back to the key 2.4%s range…

tnx

Oil spiked but has been in a steep downturn for a few weeks…

wtic

Gold jumped.

gold

After the closing bell, shares of Google Inc rose about one percent. Google reported results that beat investors’ expectations.

[please note the chart is for the new class C shares which is why there is not a longer history]

Google’s earnings rose modestly in the second quarter as the Internet company’s expensive ambitions devoured most of a surprisingly strong gain in revenue.  The report also showed that Google’s advertising prices are still dropping to extend a nearly three-year slump.  Meanwhile, the company’s expenses are steadily rising as it hires more workers, promotes products and ventures into new technological frontiers such as Internet-connected eyewear, driverless cars and robots.

Google earned $3.4 billion, or $4.99 per share, during the April-June quarter. That compared to income of $3.2 billion, or $4.77 per share, in the same period last year.   If not for the costs of employee stock compensation, Google said it would have earned $6.08 per share. That figure missed the average analyst target of $6.23 per share.  Revenue totaled nearly $16 billion, a 22 percent increase from a year ago.

goog

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