Stocks started higher as futures rallied all morning toward the bell. After the open the upside remained, but only for some of the market. Stocks split into two groups, the NYSE indices and the NASDAQ/SOX. The former sold to losses. The latter rallied to the close, recovering some of the Tuesday lost ground.
SP500 -1.42, -0.06%
NASDAQ 45.92, 0.74%
Dj30 -57.11, -0.27%
SP400 -0.60%
RUTX -0.26%
SOX 1.17%
NASDAQ 100 0.98%
VOLUME: NYSE +2%, NASDAQ -7%. Of course, NASDAQ trade is lower on the upside -- but, volume was still very strong as techs recovered. NYSE trade rose modestly on the downside, but trade was still below average.
A/D: NYSE -1.8:1, NASDAQ -1.1:1. Yes, a larger cap move upside on NASDAQ, quite obvious in that RUTX was lower and SP400 was off 0.60%
DJ30 was off for a second day, but after the nice rally it has the look it is testing that move, still easily over the 10 day EMA and fading on lighter volume.
SP500 shows a doji at the 10 day EMA, also on light, below average volume. It was disappointing it gave up the new high the day after that move, but the action into Wednesday keeps it in the trend higher. MACD remains lower but it has been low for awhile as SP500 has rallied higher.
NASDAQ recovered much that was lost Tuesday, holding over the 10 and 20 day EMA on the close. Still fighting to consolidate that drop to the 50 day MA's, moving back up on solid volume. It is working on it, but again, it is still an open question.
SOX showed the same action as NASDAQ, recouping much of the Tuesday loss, holding near support, still consolidating after the big move higher, the big drop, and modest rebound. Chips obviously performed better on the day, but are still a work in progress in this lateral move where SOX tries to consolidate for some more upside.
SP400 midcaps suffered another sharper downside session, falling to the 50 day EMA on the close. From new highs just over a week back to now testing a major support level after 2 sharp declines. Still trending, found support here in early July that led to a bounce. If the upside is to continue, this is where it will need to do so.
RUTX small caps declined as well but the drop was much less than SP400 and it also tried a move higher before it gave up. Not fantastic action, but still trending and still over support. As with SP400, RUTX will need to find some bids soon to keep the trend positive.
LEADERSHIP
Some leaders took hits such as manufacturing (e.g. CAT, CMI, TEX), some new groups emerged (biotechs, e.g. BLUE, IMGN already leaders, CELG, BIIB rallying), others tested (e.g. financial), and still others continued to rally (Chinese stocks, e.g. BABA, NTES, SINA).
Techs: Some upside moves given NASDAQ advanced, but some of the best moves were in software as CALD, DATA, RHT rallied well. ADBE gapped to a new high on its results. ORCL is doing well before and after its results. WDC remains strong.
Financial: Mostly some easy pullbacks to better set up, e.g. JPM, C, GS, but also some sharper declines by regional banks OZRK, TCBI. Watching those closely.
Materials continued to hold up well in their patterns: LPX, USCR, MAS.
Drugs/biotech: Strong session as money surged their way. BLUE, IMMU up nicely as leaders while others that have languished forever surged, e.g. CELG, BIIB, GILD.
China stocks: NTES, BABA up again as SINA breaks higher. YNDX still looks good to break upside. JD jumped back upside, perhaps ready to run again.
Chips: Of course they improved as SOX posted a gain. AMD continues an impressive move, gapping higher and rallying 10+%. MU posted a nice 3.8% move. AVGO up but still struggling. MRVL continues consolidating in a good pattern. SIMO in a nice 50 day MA test. ON and SMTC testing the 50 day as well. This group is still problematic with SWKS, SLAB just a couple that are struggling.
FAANG: FB moved up off the 10 day EMA, working toward a new high once more. AMZN modestly higher, also just below the prior all-time high. AAPL up but still below the 50 day MA's. NFLX rallied back to the 50 day MA's after over a week below them. GOOG shows the same action as AMZN, holding over the 10 day EMA and just below the prior all-time high.
We picked up a variety of positions, grabbing some BLUE (biotech), CALD (software), HOS (energy), SINA (China) and let other positions work. The chips still have to show some upside; most of our positions in that group held key support and they now need to bounce.
The large cap NYSE indices are testing nicely. SP400 is worrisome, RUTX not so much so, but both need to show upside again soon. NASDAQ and SOX are hardly out of the woods, holding on at the 50 day EMA, bouncing a couple of sessions, but now hard-pressed to keep it going. Again I have to make the call: Hello? Plunge protection team? Can you goose the upside again?
Have a great evening!
Jon Johnson, Chief Market Strategist
InvestmentHouse.com
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