A Tough Day for the Big Caps Leaves Investors Breathless
Stocks went down a little earlier than expected but have yet to set a lower low.
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The Market
I really thought we’d wait until next week for the market to head down but I guess it was in a hurry to do so. On the first day of the month too.
Yet there were no real breaks in the S&P or Nasdaq. They all came down to the areas they have been toying with for a week now. The SOX made a marginal lower low. Here’s what I find fascinating: everyone is so breathless over the declines in the big cap indexes (despite them being in the same place for a week now) that they haven’t mentioned the Utes or the Banks.
The Utes, where I have been bullish are now over 1000. My measured target is 1030 but if you wanted to book a few profits here I wouldn’t stop you. I would recommend it. To put that number on the XLU that is a target near 76. Remember how at 950 on the Utes (72 on XLU) everyone loved them? At 900 (68 on XLU) we got silence, yet that was the place to buy em again. Now? Up over ten percent in a few weeks and not a peep.
The Banks got clocked today and all the folks who loved them at the highs seem to have gone on vacation. I think the Bank Index gets down to 106-108 (at least).
Tomorrow we have the Employment number which by now I guess everyone expects will be weak. While I think rates are going lower (TLT is going up) we can see TLT closed near the low of the day so I wouldn’t be surprised if we see it pull back tomorrow.
New Ideas
Let me address Moderna MRNA where I thought it would hold and rally from that 110-115 area and I was so very wrong. There is a support line near 80 and a gap to be filled around 88. I suspect that is where the stock is heading now.
For the person who asked about Deere DE a few weeks ago: today’s move took it down to the bottom of the range. If the market was intermediate term oversold I would be willing to take a stab but it is not. Be careful if it breaks.
Today’s Indicator
The ten day moving average of the put/call ratio is rising now. But the more intermediate term 30 day moving average of the equity put/call ratio is now .58 which is not bullish and in keeping with my view that August should be a tough month in the market.
Q&A/Reader’s Feedback
I am inclined to think Embraer Aircraft ERJ is not getting through on the upside. It had a chance and failed to do so. Ee how easily it made a higher high in May? Not so now. For now support is back at that uptrend line so watch that for support.
The fact that Meta META could not get to the early July high is a problem in the short term. But mostly when we step back we see that if we ex out January the stock hasn’t gone anywhere all year. In the near term I would say that if it fills that gap back there around 475-480 you’d buy it.
As someone who has liked energy for months I have been sorely disappointed in the lethargic way the stocks have rallied. Exxon XOM is a perfect example. I’d like to see how it looks back at that uptrend line. If it can hold and we’re intermediate term oversold, then I’d be willing to take another shot at it.
I drew in this line on Qualcomm QCOM in mid July, looking for the line to break. And it has. That break measures into the 155-160 area. I would guess it gets a bounce from there but that’s the best I can say right now.
