Today the stock market received another boost as the major equity indexes finished in positive territory. Yet, I seriously doubt if one could attribute this to the mediocre Q3-2015 GDP report (actual @ 2.0% vs. consensus @ 2.0% and prior @ 2.1%). The U.S. Existing Home Sales report for November-2015 certainly didn’t help either (actual @ 4.76mm vs. consensus @ 5.32mm and prior revised @ 5.32mm).
Perhaps it was WTI Crude Oil which maintained support for its 7th consecutive trading session and is now almost at parity with Brent Crude, which some interpret as light at the end of a long dark energy market tunnel. Lately, stocks have become a derivative play on oil and the recent stabilization in energy is helping. To underscore this recent correlation pattern, 74% of the stocks in our energy sector universe increased in price today.
Surprisingly, despite some slight weakness in the US Dollar, Gold still declined in price but remains more than 25 points above last week’s low and appears to be consolidating some of its gains.
Standout sector performance was witnessed in Industrials (XLI +1.38%), Consumer Staples (XLP +1.30%), Materials (XLB +1.27%), Telecom (IYZ +1.19%) and Energy (XLE +1.17%).
Individual stocks exhibiting extremely bullish trading patterns were Marriott Int’l (MAR +5.09% on 89% volume surge), Caterpillar Inc (CAT +4.86% on 54% volume surge), and Anadarko Petroleum Corp (APC +4.30% on 69% volume surge). All three are showing signs of a strong trend reversal and could be due for more upside. In biotechnology, Baxalta Inc. (BXLT +4.55% on 126% volume surge) made a new 3-month high to continue its bullish uptrend.
On the bearish radar emerged Netapp Inc (NTAP -4.96% on 205% volume surge) and Chipotle Mexican Grill (CMG -5.25% on 222% volume surge). Both stocks made new 52-week lows, which is hardly a good sign in an advancing market.
No further comments…
*Trends: ST = short-term; MT = Intermediate-term; LT = long-term
Once again, the SP-500 experienced overwhelmingly positive breadth and, once again, a significant number of its stocks traded up on lower than average volume. Market momentum is still bearish but improving. If it sounds like I don’t like this rally, it is because I don’t and am somewhat reluctant to trust it, given the existing weak market internals.
In its favor, I must acknowledge the bullish implications of the triple bottom pattern from which it is attempting to rally. If the SP-500 can surmount resistance @ the 2055-2060 levels, then it might grab my attention. Such a feat would be most impressive since 37% of its components are trading 3% or more below its 50 day moving average and 49% of them are off 3% or more from their 200 day moving average as well.
For now, the trend remains bearish and, therefore, I urge caution going into the New Year, lest you get caught with a lump of coal upside the head from Old St. Nicks’s evil cousin, Krampus.
Hillbent on the Market Direction…
|Daily Chart Technical Analysis|
|New 5-day highs||93||New 5-day lows||48|
|New 52-week highs||8||New 52-week lows||22|
|Bullish reversals||60||Bearish reversals||29|
|% > 20 M.A.||% > 50 M.A.||% > 100 M.A.||% > 200 M.A.|
|37% ↑||39% ↑
|↑ = positive momentum; ↓ = negative momentum; and ↔ = neutral momentum|
Volume Radar Alerts
- Vol % = volume percentage greater than average volume
- SIR = short interest ratio or days to cover
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