- The S&P 500 recently made a significant breakout above its previous all-time high and has now delivered its 2nd week of positive performance since then.
- The market is extremely overbought and bulls will have to rely more upon earnings or monetary policy fundamentals to drive it higher as momentum becomes technically unsustainable each with trading session.
- Otherwise, in plain English, I am anticipating a correction.
Weekly Price Volume Analysis
Top 20 Volume Dollars Positive % Change
This week’s list of volume-dollar gainers was dominated by positive price performance, i.e. 90% winners vs. 10% losers. Some standouts in terms of increased volume dollars percent change were:
- Seagate Technology (STX) up +9.27% on a +16.21% change in volume dollars has been under accumulation the past 4 weeks. While its stock has advanced more than +71% from its May-2016 low and it continues to attract buyers, this week’s below average volume may suggest some early signs of buyer fatigue as well as investor caution with the company reporting earnings on August-2-2016.
- Ebay (EBAY) reported much better than expected earnings @ 0.43 vs. estimates @ 0.36. Investors rewarded it with weekly gain of +15.76% and a new all-time high as volume dollars surged almost 12% during weekly trade and even surpassed its average weekly volume.
- One notable loser amongst the list was Freeport McMoran (FCX), which reports earnings next week on July-26-2016 before the market opens. During the week, it declined -3.36% on an 8% increase in volume dollars. Weekly volume was significantly below its average weekly trading volume and may indicate signs of profit taking since its stock has more than 350% since bottoming in January-2016. Presently, it is attempting to consolidate some of these gains on less than average weekly trading volume.
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Bottom 20 Volume Dollars Negative % Change
Stock prices tend to fall on weaker volume and that is exactly what occurred in this week’s list of declining volume-dollars. 16 out of 20 or 80% of the companies listed in our report declined in price. Some of the more notable ones were:
- Netflix (NFLX) investors suffered heavy casualties with the stock being down -12.7% on a -4% contraction in volume dollars. Volume for the week exploded well beyond the weekly average as the company beat earnings but failed to deliver the estimated subscriber growth. Price target @ $80 will be an important psychological test of support.
- Despite beating earnings @ $0.41 vs. estimates @ $0.39%, Hasbro (HAS) -5.96% in price on a 3% drop in volume-dollars and much higher than weekly average volume. $80 is a key level of support, which if failed could see the stock trading to $70.
- One outlier amongst decline volume-dollar (-3.72%) stocks was Humana (HUM), which gained +10.8% during the week on higher than average weekly volume. It still faces overhead resistance @ 185 to 192 levels.
Asset Class Performance Summary
For a quick snapshot of its performance relative to other asset classes, see the performance summary table of various asset classes below.