The S&P tagged the 8-day moving average on today's weakness as it broke the upper level ascending channel to the downside. The S&P and Dow both finished the day in the red, down 0.38% and 0.16% respectively, while the Nasdaq eked out a marginal gain of 0.01% thanks to the strength in sector heavyweight Apple (AAPL).
After today's action it makes sense to have a more neutral stance to the market as the market seems a little lethargic at these upper levels. There has been a big move in the S&P from the June 24 low to the new high of 1698. A rest would be constructive in the indices and it would be prudent to increasingly shift your focus to individual stocks. Overall, less is more in this current environment.
This evening we have seen a slew of strong earnings, highlighted by Facebook (FB) and Baidu (BIDU), which are up 20% and 13%, respectively.
S&P
Source: eSignal
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The Russell 2000 Index (IWM) finished the day down 0.83% as the ETF broke below the upper ascending channel in today's session. As stated yesterday, a break of $104 could put some short-term pressure on the index, although the overall the macro uptrend is strong. There is a gap from July 11th at $101.94 that could be tested on this weakness.
Russell 2000 Index (IWM)
Source: eSignal
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The Dow Jones Transportation Average (IYT) finished the day down 1.15% as it saw continuation to yesterday's weakness. As we stated yesterday, a close below $116 could trigger some short-term weakness in this ETF as it would break the accelerated uptrend that has been in place since the June 24 low. There could be some support at the 50-day moving average around $113.50.
Dow Jones Transportation Average (IYT)
Source: eSignal
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The SPDR S&P Homebuilders (XHB) finished the day down 2.08%. The sector has been showing relative weakness and in today's session it gave some signals to take caution as it broke the mid-level range. The next level of support is $29.30.
SPDR S&P Homebuilders (XHB)
Source: eSignal
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The financials and Financial Select Sector SPDR (XLF) have been showing relative strength lately as the group broke out to new 52-week highs earlier this month. The group is holding up well but may need a rest at these current levels.
Financial Select Sector SPDR (XLF)
Source: eSignal
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Selective Stock Set-Ups
Apple finished the day up 5.14% after a strong earnings report last night. Today was a step in the right direction for this fallen leader. The $235 level is the new pivot to trade against. It will be key for Apple to build on today's strength going forward in order to potentially break out of this lower level pattern.
Apple (AAPL)
Source: eSignal
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Tesla Motors (TSLA) finished the day down 0.85%. There continues to be two-way trading potential in this stock for the active trader. Use your shorter time-frames to initiate positions here as the stock will need more time to develop a base before it comes on the radar as a swing candidate.
Tesla (TSLA)
Source: eSignal
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The ExOne Company (XONE) finished the day down 2.43% and has been another good short-term vehicle for active traders. Mentors in the T3 Live Momentum Trading Room Mike Lee and Steve Levay have been focusing on this stock as they look to take advantage of its extreme volatility. A move below $60 could be a good potential short entry for cash flow.
ExOne Company (XONE)
Source: eSignal
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At the time of publication the author is long AAPL, short SPY. Long FB call spread.