Trading Places with Tom Bowley

There's No Spooking The Bulls As Friday The 13th Results In New Record Highs

Market Recap for Friday, October 13, 2017

There are plenty of superstitious folks out there, but apparently the majority of stock traders don't fall under that umbrella.  U.S. equities again rose on Friday with the Dow Jones, S&P 500 and NASDAQ all climbing to all-time intraday highs.  Only the NASDAQ, however, was able to finish with a record high close.  The small cap Russell 2000 failed to join its larger cap counterparts in record territory as this index battles extremely overbought conditions and its tendency to struggle during the first half of October.

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Sectors Mixed, But That Doesn't Slow Down U.S. Equities

Market Recap for Thursday, October 12, 2017

It was certainly a bifurcated day among sectors.  Four sectors advanced, including industrials (XLI, +0.53%) and utilities (XLU, +0.52%), while five declined.  Financials (XLF, -0.76%) were hardest hit as the 10 year treasury yield ($TNX) has struggled to gain any ground since testing 2.40% yield resistance one week ago.  That helps to explain the relative weakness in financials over the past week as well.

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Broadline Retailers Move To Two Month High To Lead Major Indices

Market Recap for Wednesday, October 11, 2017

A strange pair - utilities (XLU, +0.43%) and technology (XLK, +0.33%) - combined to lead our major indices higher on Wednesday with the NASDAQ rising 0.25% to close at another all-time high.  Seven of the nine sectors ended the day in positive territory as only financials (XLF, -0.19%) and industrials (XLI, -0.06%) were down.  Among the major indices, only the Russell 2000 finished lower, dropping a mere 0.07%.  Overall, it was another solid day, especially considering that most indices and sectors were overbought entering the day.

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Late Day Buying Sends Dow Jones Into The Record Books Again

Market Recap for Tuesday, October 10, 2017

The Dow Jones finished 69 points higher on Tuesday to close at yet another all-time high.  It's an illustration of how equities can remain overbought for an extended period of time.  The Dow Jones moved into overbought territory (RSI 70+) 7-8 days ago, yet we've seen the Dow push higher nearly every day, rising 400 additional points in the process.  It underscores the reason why shorting is simply not an option.  Bull markets use rotation to their advantage and Tuesday was a perfect example.  Over the past month, the two worst performing sectors were utilities and consumer staples.  Care to guess what led the rally on Tuesday?  Yep, it was utilities (XLU, +0.97%) and consumer staples (XLP, +0.88%).  Keep in mind that leadership from these two defensive groups over a long period of time would not be healthy for U.S. equities as it would suggest a lack of sustainability.  But rotation to defense, especially when key support is being tested in those sectors, is fine in my view.  Check out the long-term weekly chart for both:

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Specialty Retailers Flash Short-Term Sell But Long-Term Buy

Market Recap for Monday, October 9, 2017

The U.S. major stock market indices took a breather - if you want to call it that - on Monday as the Dow Jones, S&P 500 and NASDAQ all fell less than 0.25%.  Only the Russell 2000 lost more than that, dropping 0.44%, but small caps benefited from a huge rally that began in mid-August so let's cut them a little slack.  While it may not have looked like much, the slight selling actually helped on the hourly charts as you can see below:

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Bull Market Resiliency Shines Through After Weak Jobs Report

Market Recap for Friday, October 9, 2017

Extremely overbought and extended conditions.  Complacency in the form of a very low Volatility Index ($VIX) reading.  Geopolitical tensions.  Then a negative jobs report.  The market was surely doomed on Friday, right?  Wrong.  That complacency, as evidenced by near record low readings in the VIX, is a signal that the stock market has the ability to overlook bad economic news - or any news for that matter.  And THAT, in a nutshell, sums up the market action from Friday.  The September nonfarm payrolls were reported at a minus 33,000!  That was 133,000 jobs short of the +100,000 consensus estimate.  Throw in the tighter than expected labor conditions and a big unexpected spike in average hourly earnings and talk of wage inflation surfaced.  The stock market's reaction?  One giant collective YAWN.  And it's the stock market's reaction -  the price action - that matters more to me than the fundamental news.

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Right On Cue, Internet Stocks Break Out; NASDAQ 100 Soars

Market Recap for Thursday, October 5, 2017

Well, if you were worried about an underperforming technology sector and the inability of the NASDAQ 100 ($NDX) to reach new highs, you can stop worrying.  Both broke out on Thursday with emphatic moves to clear highs established over the summer.  First, check out the bullish ascending triangle pattern that was cleared on the NDX:

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Consumer Stocks, Healthcare Take Their Turn To Lead U.S. Equities To New Highs

Market Recap for Wednesday, October 4, 2017

This bull market advance continues to be about rotation.  Index rotation.  Sector rotation.  Individual stock rotation.  Few areas of the market are breaking down.  It's mostly about gains, consolidation, then more gains.  On Wednesday, the red hot Russell 2000 took a day off.  How can you blame traders for taking some profits off the table.  Check out the recent run in small caps:

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Airlines Catch Seasonal Jet Stream To Lead Transports, Market Higher

Market Recap for Tuesday, October 3, 2017

It didn't take long for the seasonal tailwinds to kick in for airlines ($DJUSAR).  I posted last Friday that airlines were poised to breakout technically and highlighted Alaska Air Group (ALK) as one airline that has performed extremely well during the fourth quarter, especially October.  Well, the breakout happened yesterday for the entire group and it was a sight to see.  The DJUSAR soared 5.64% as transports ($TRAN) added to their already very overbought conditions.  Check out the breakout on the DJUSAR:

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October Begins In Record-Setting Fashion

Market Recap for Monday, October 2, 2017

It was another record day on Wall Street.  The Dow Jones, S&P 500, NASDAQ and Russell 2000 all closed at fresh all-time highs.  Wide participation is a hallmark of a bull market rally and, make no mistake, there's been wide participation on this rally.  The only disappointment on Monday was the NASDAQ 100's ($NDX) inability to join the party.  Key large cap technology names did not participate and that held back the NDX.  Materials (XLB, +1.09%), healthcare (XLV, +1.02%) and financials (XLF, +0.85%) led the rally and that leaderboard helps to explain the lack of participation of the NDX as it has no components in the materials sector and only a few financials - all in financial administration.

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