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3/16/16 FED TAKES MORE DOVISH TONE ON RATE HIKES -- SHORTER RATES LEAD YIELDS LOWER --TIPS REBOUND ON INCREASED INFLATION EXPECTATIONS -- DROP IN DOLLAR BOOSTS COMMODITIES -- CANADIAN DOLLAR CLEARS 200-DAY LINE -- S&P 500 EXTENDS GAIN OVER 200-DAY AVERAGE -- VIX FALLS TO THREE-MONTH LOW -- A GOOD DAY FOR RISK ASSETS
By John Murphy
3/9/16 PERCENT OF NYSE STOCKS ABOVE 50-DAY AVERAGE REACHES TWO-YEAR HIGH -- % OVER 200-DAY LINE TESTS FOURTH QUARTER HIGH -- NYSE ADVANCE-DECLINE LINE LOOKS STRONG -- NYSE BULLISH PERCENT INDEX CLEARS 50% -- BUYING OF CORPORATE AND JUNK BONDS SHOWS NEW OPTIMISM -- CYCLICAL AND MATERIAL SPDRS CHALLENGE 200-DAY LINES -- AUSSIE ISHARES TURN UP
By John Murphy
3/3/16 -- COMMERCIAL VEHICLE AND TRUCK GROUP LEADS INDUSTRIAL SECTOR HIGHER
-- DEERE, PACCAR, AND CATERPILLAR TEST 200-DAY AVERAGES
-- GATX CLEARS ITS 200-DAY LINE TO LEAD TRANSPORTATION GROUP
-- SO HAS JB HUNT-- PERCENT OF NYSE STOCKS ABOVE 50-DAY AVERAGE NEARS FOURTH QUARTER HIGH
Thank you,
John Murphy
3/2/16 ALCOA AND FREEPORT MCMORAN CONTINUE TO RISE WITH INDUSTRIAL METALS -- SO DO STEEL STOCKS -- AKSTEEL, STEEL DYNAMICS, AND RELIANCE STEEL CLEAR 200-DAY AVERAGES -- AUSSIE AND CANADIAN DOLLARS ARE RISING WITH COMMODITIES -- OLD DOMINION FREIGHT JOINS C.H. ROBINSON IN TRUCKING UPTREND
By John Murphy
3/1/16 -- MARKET RALLY PUSHES ALL MAJOR INDEXES OVER THEIR 50-DAY AVERAGES TO STRENTGHEN SHORT-TERM TREND
-- INDUSTRIAL AND TECHNOLOGY SPDRS CLEAR 200-DAY LINES
-- EMERGING MARKETS LEAD GLOBAL RALLY
-- TAIWAN SEMICONDUCTOR BREAKS OUT
-- SEMICONDUCTOR ETFS TEST 200-DAY LINES
John Murphy
2/24/16 STOCKS TRY TO STABILIZE WITH OIL -- SHORT-TERM TREND REMAINS NEUTRAL -- BANKS ALSO BOUNCE WITH OIL IN AFTERNOON TRADING -- KEEPING SHORT-TERM BUY SIGNALS IN PERSPECTIVE
By John Murphy
2/22/16
WHAT KIND OF A BOTTOM?... It's looks like the market has put in some kind of a bottom. That will be especially true if 50-day moving averages are exceeded. But what kind of a bottom? So far, all we can say with some confidence is that stocks have put in a short-term bottom. My recent messages, however, have shown that several U.S. sectors and indices, and well as the FTSE All World index, have reached important support levels where a more important bottom could start to form. Those stock indexes are also in very oversold conditions. New signs of strength in commodities, combined with stronger emerging markets, would also take a lot of pressure off world markets. Some indicators shown in my Saturday message also suggest a stock market that is trying to form a bottom. It will have to do a lot more on the upside to strengthen that view. But it's off to a good start.
By John Murphy
2/17/16
SMALL CAP INDEX BOUNCING AS WELL... Over the last week, I've shown two of the market's weakest groups -- the transports and banks -- having reached potential support levels and in a deeply oversold condition. Both are helping lead this week's rally. Small caps are another weak group in the same positon. Chart 8 shows the S&P 600 Small Cap Index rebounding from last week's successful test of its January low. Elliott Wavers will notice the five-wave decline from the start of December, which usually signals that the downleg has been completed. A close above its early February peak would turn its short-term trend higher. [That five-wave decline also shows up in several other market indexes]. The long-term chart of the SML is also encouraging.
2/13/16 FRIDAY'S RALLY PREVENTS CHART BREAKDOWN -- OIL RALLY GIVES STOCKS A STRONG BOOST -- ENERGY SHARES ARE IN POTENTIAL SUPPORT ZONE -- BANK SHARES TEST LONG-TERM SUPPORT LINES -- FRIDAY'S JUMP IN BOND YIELDS ALSO HELPS STOCKS -- RISING BOND/STOCK RATIO IS OVERBOUGHT -- DEAN FOODS AND KELLOGG HIT NEW HIGHS
By John Murphy
2/11/16 TREASURY YIELDS FALL TO THREE-YEAR LOW AS PRICES SURGE -- THAT'S REALLY HURTING BANKS AND LIFE INSURERS --
PRUDENTIAL TUMBLES -
- MONEY CONTINUES TO FLOW INTO TREASURY BONDS, GOLD, AND THE JAPANESE YEN --
DOW ON VERGE OF BREAKDOWN
By John Murphy
2/6/16 CONSUMER DISCRETIONARY AND TECHNOLOLGY STOCKS LEAD MARKET LOWER -- NASDAQ UNDERPERFORMANCE IS A BAD SIGN -- GOLD STOCKS HAVE A STRONG WEEK -- MONEY ALSO FLOWS UTILITIES, TELECOM, AND FOOD -- TYSON FOODS HITS RECORD HIGH -- NETFLIX TUMBLES BELOW SUPPORT -- VIX IS STILL TOO LOW TO SUPPORT A MARKET BOTTOM -- JUMP IN JAPANESE YEN SHORT-CIRCUITS JAPANESE STOCK RALLY
By John Murphy
2/5/16 NASDAQ LEADS MARKET INTO BAD END FOR THE WEEK
-- INTERNET-RELATED STOCKS LEAD TECHNOLOGY SECTOR LOWER --
AMAZON.COM BREAKS 200-DAY AVERAGE --
THAT'S ALSO BAD FOR CONSUMER DISCRETIONARY STOCKS WHICH ARE ALSO LEADING THE MARKET DOWN --
STOCKS HAVE TAKEN A TURN FOR THE WORSE
By John Murphy
S&P 500 NEARS TEST OF SEPTEMBER HIGH ... Chart 3 shows the S&P 500 trading below its 200-day average for the second day in a row. It's also bearing down on its September peak near 2020. That will be an important test. Its 50-day line is just below that. A close below those two lines would signal a much deeper correction. Such a breakdown would also call into question the sustainability of the fourth quarter rally. Some other indexes look even worse. Chart 4 shows the S&P 600 Small Cap Index in danger of slipping back below its 50-day moving average. Lack of upside participation by smaller stocks has been a source of concern over the last month. More weakness by smaller stocks would worsen the market's technical condition.
chart 3
chart 4
S&P 500 RETESTS 200-DAY AVERAGE ... Going into this week, the S&P 500 was up against chart resistance along its summer high and in a short-term overbought condition which was starting to weaken. That was shown by its 14-day RSI line (top of chart) starting to retreat from its overbought level at 70. That line is nearing its first potential support level at 50. At the same time, the price bars show the S&P 500 pulling back to initial support at its 200-day moving average (and the 2060 level). Daily MACD lines (below chart) have turned slightly negative for the first time since late Sepember, which also reflects short-term weakness. [The fact that weekly MACD lines are still positive, however, is supportive to the market's broader uptrend]. Even if the 200-day line is broken, important support is likely around the September peak near 2020. So far, this looks like a normal pullback after October's strong gains. And seasonal trends remain positive, especially after Thanksgiving.
S&P 500 SPDRS PULLS BACK FROM OVERBOUGHT CONDITION... My Wednesday message showed the S&P 500 SPDRS (SPY) up against resistance at its summer highs. It also showed the 14-day RSI line having reached its overbought barrier at 14, which increased the odds for a consolidation or pullback. Chart 5 shows the RSI starting to slip even more. That increases the odds for some weekend profit-taking. Chart support is likely near 206 and/or its rising 200-day average (red arrow). Any pullback, however, showed be viewed as a pause in a longer-range bullish trend. We'll take a more in-depth look at how things look over the weekend.
EQUAL WEIGHT ETFS LAG BEHIND... The S&P 500 Index shown in Chart 1 is a market cap index. That means it gives greater weight to bigger stocks. Chart 2 shows the S&P 500 Equal Weight ETF (RSP). As its name implies, the RSP gives equal weight to each of its 500-day stocks. That means that smaller stocks are given the same weight as larger stocks. That's why the RSP is lagging behind the SPX, and it has yet to clear its 200-day line. A move above its 200-day line would help alleviate concerns about lagging "market breadth". By contrast, Chart 3 shows the Nasdaq 100 Equal Weighted Index (QQEW) already trading above its 200-day line. It's not rising as fast as fast as the Nasdaq 100 which has reached its summer high (top of chart), but both are in uptrends.
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