STTG Market Recap August 5, 2014

Indexes opened down and dip buyer never showed up; this is a stark change from what we wrote repeatedly in June and July when morning dip buyers showed up nearly every day.  We remain in a cautionary stance brought on by the action late last week.   The S&P 500 fell 0.97% and the NASDAQ 0.71%.  Ukraine was pointed at as the culprit but more realistically this is a market that had rallied and is now showing cracks – Ukraine had not been an issue for a month so it is convenient to point to it today all of the sudden.  There was also good economic news which again – perversely – the market does not want too see too much more of because it means the Federal Reserve may raise rates sometime in our lifetime.

The Institute for Supply Management’s service index climbed to 58.7 in July for its highest reading since December 2005, while a separate survey found orders for U.S. factory goods rising 1.1 percent in June.

Interestingly this downtrend line in the NASDAQ connecting the early July highs to lower highs later in the month – that was broken to the upside late July, is now acting as resistance.   The S&P 500 bottomed today exactly at the 100 day moving average – imagine that.  Without a chart you would never see that as a stopping spot.

spx nasdaq

The NYSE McClellan Oscillator remains deep in the red – any heavy selling tomorrow would provide (as it did late Friday) a very short term long side trading opportunity for the very short term, nimble trader.

nymo

In times like this other than a few leadership stocks there are not going to be a lot of interesting buying opportunities unless it is for very short term flips.  While there will be leadership stocks to focus on most stocks moving up today will falter soon enough until we leave this correction – whatever length it might be .

However we do have some new leaders – we mentioned U.S. Steel (X) recently and you see it today bucking the market trend again.  It looks a lot like Facebook and Baidu (charts we posted yesterday).  With a chart like this if you are going to be aggressive you try to buy on pullbacks and then if it begins to break the gap up it created (mid $41s) you can stop out – because that means it might go all the way back down to the $28s.  But right now this stock is VERY overbought – just giving you an idea of one of the few names doing well here.

x

Hospital HCA Holdings (HCA) is another such stock.

hca

You can contrast this to Intel (INTC) which had been a market leader for the past few months.  Today it broke out of a high level area it had been holding up so looks vulnerable to more downside in the coming weeks.  So if you have shorts on the brain here is one you can short against the upper trend line.

intc

Target (TGT) fell as it cut its second quarter outlook.

tgt

 

 

 

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Comments

  1. Folker says

    Hello Mark,

    thank you very much for your market recaps, like today. The market recaps are really meaningful to me, like today especially:

    ‘In times like this other than a few leadership stocks there are not going to be a lot of interesting buying opportunities unless it is for very short term flips. While there will be leadership stocks to focus on most stocks moving up today will falter soon enough until we leave this correction – whatever length it might be .

    However we do have some new leaders – we mentioned U.S. Steel (X) recently…’

    Such meaningful recaps are really of great help for me.

    Thank you.

    Kind regards,

    Folker