Market Alert - The Close

A second day of NYSE indices testing while tech and chip indices and stocks recovered a bit of lost ground from the week of selling. When the trades settled, not much had changed. The NYSE indices faded for three days while the techs and chips modestly recovered. Neither group changed their recent bias, i.e. NYSE upside, tech/chips fighting to hang on and remain in upside trends.

SP500 -0.30, -0.01%
NASDAQ 14.17, 0.21%
DN30 -39.73, -0.16%
SP400 -0.43%
RUTX -0.52%
SOX 0.31%
NASDAQ 100 0.45%

VOLUME: NYSE -9.5%, NASDAQ -9%. Volume faded on the NYSE test showing good price/volume action. Volume faded on the NASDAQ advance, showing less than ideal price/volume action. FB, AAPL volume up on gains, a positive. GOOG, AMZN volume down on gains, not so positive.

ADVANCE/DECLINE: NYSE -1.4:1, NASDAQ -1.9:1. Modest NYSE decline while all NASDAQ upside movement was due to the large caps.

As late as the last hour it looked as if the big techs might be putting in an important session. GOOG was over the 10 and 20 day EMA, FB was through the 50 day MA's and the 10 day EMA, AMZN and MSFT were over the 10 day EMA. Alas, they did not hold those levels to the close. No, they did not violently reverse, but they gave up at the highs and gave up somewhat important levels.

Doesn't mean the move is over, but after two upside sessions the strength was so-so, the recent downside strength still looks formidable and in the way of the upside, particularly on FB and AMZN, even GOOG. AAPL looks great, MSFT is not bad.

Moreover, the NYSE indices have put in really nice 1-2-3 pullbacks to near support. They look ready to bounce. When they do, will the bid be pulled from the large techs and some pretty good but just not good enough and strong enough moves?

Where does that leave them? Well, with the NYSE set to bounce, we will see if the bids for the techs and chips the past couple of sessions have any staying power. In other words, can all of the sectors again rise together or will the rotation resume back to the NYSE stocks and leave the techs and chips behind?

That is the big, 'rally to yearend?' question. The large techs and FAANG have tested with NASDAQ and NASDAQ 100 coming near the 50 day MA and bouncing, but nothing big and strong. Perhaps they melt up as the NYSE indices bounce off their tests of near support. Perhaps, but they certainly did not fare well as the NYSE indices broke higher just over a week ago. They will need continued bids to overcome the 2-day bounce from the selling, a bounce that recovered some, but frankly not even half, of the week of selloff.

On the day oil was slammed and with it the oil stocks. Left at the altar again? I have a big position in a large oil stock that I have had for years. I sold calls against it on the recent move higher and they are almost at the buyback point; may get to sell the next lower level as soon as tomorrow if this keeps up. Of course, that meant we closed some upside oil plays as CRR and SN broke what we consider key levels.

We picked up positions in ROKU. That stock put in an upside engulfing pattern, gapping lower to the 20 day EMA, finishing the test to that level, then reversing up through the 10 day EMA and the Tuesday high, all on much stronger volume.

Afterhours LULU beat with some impressive earnings as did AVGO. Both are screaming higher afterhours. Could be that LULU sparks retail buying once more given the NYSE indices are in great position to rebound. Can AVGO do the same for chips and techs? Could, but it is a stretch.

Have a great evening!
Jon Johnson, Chief Market Strategist
InvestmentHouse.com
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