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Wednesday, November 8, 2017

Market Alert - The Close

Wednesday was no major recovery from the Tuesday doldrums and RUTX' dive lower, but once again it showed the bids could not stay away. The pre-market was lower, but some bids did return to push the indices positive, albeit modestly. Growth fared a bit better, a flip from Tuesday, and NASDAQ 100 led the entire market as AAPL, AMZN, GOOG posted very decent moves.

SP500 3.74, 0.14%
NASDAQ 21.34, 0.32%
DJ30 6.13, 0.03%
SP400 0.30%
RUTX 0.18%
SOX 0.35%
NASDAQ 100 0.40%

VOLUME: NYSE -3%, NASDAQ -5%. Lower but also still above average on each exchange. Not as much buying as Tuesday churn and downside, but traded did not fall off the cliff on a rebound session.

ADVANCE/DECLINE: NYSE 1.04:1; NASDAQ -1.05:1. Talk about large cap days; NASDAQ breadth negative with NASDAQ up a third percent.

The tax reform questions continued as the Senate now looks as if its bill -- why does it have its own bill without working on the House bill? -- will not be out until Thursday, showing that Mitch McConnell's slip from earlier in the week was telling the truth though, as is always the initial reflex in DC, an attempt was made to cover it up.

Then you have the governor elections in the blue states of VA and NJ where the democrat candidate won and that is being reported as some repudiation of what Trump and SOME in the GOP want to get done. I would posit, however, it is BECAUSE the GOP is not really attempting to implement the winning platform that the GOP base was not enthused and any possible converts saw no reason to change votes. IF they had got on the ball, perhaps some positive changes would already be in the works. No, there is more at work than anyone wants to talk about.

With the backdrop the same as Tuesday, there was not much change in investor/trader preferences for the various stock sectors. All indices maintained their relative positions in their patterns despite the percentage gains flipping back to the growth sectors' favor.

That means SOX, NASDAQ remained the most recent leaders, punching out nominal new highs, while SP500 did the same as it continued a very decent move up its 10 day EMA. DJ30 continued to rest in its uptrend over the 10 day EMA, while the SP400 midcaps tested the 20 day EMA again (bouncing off the lows to hold the trend). RUTX rebounded for a very modest gain, particularly compared to the strong Tuesday selloff.

But RUTX, as noted, was not that bad. Yes it closed with a most modest and inconsequential percentage price gain. It is how RUTX did it that matters. We anticipated RUTX would reach down to the 50 day MA at a minimum on this test, and it did it right away. More than that, RUTX bounced very nicely off that test, coming in positive and showing a nice doji with tail. Tested the 50 day, found buyers, jumped back to close positive. It still has the 38% Fibonacci retracement at 1451 (reached 1469 on the intraday low) that beckons; for now, however, it showed very good action at the 50 day MA.

We picked up some BWLD and JNJ, took some gain on SQ ahead of its earnings. There are still some very interesting upside setups as new plays continue to form up. Definitely looking at more of those as the rally, despite being panned and moving slowly at times, is sending many stocks higher, some sharply so.

Have a great evening!

Jon Johnson, Chief Market Strategist
InvestmentHouse.com
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