Today’s comments will be short. As mentioned yesterday, there are almost 200 of the S&P 500 companies reporting this week. In addition to this, the market is eagerly awaiting the latest communications from the FRB (Federal Reserve Bank) and BOJ (Bank of Japan). Not much will happen until then. As the market is resting, I’ll do the same with today’s light commentary.
Price Volume Analysis
The top 20 stocks in the S&P 500 which experienced significantly higher than average trading volume was almost equally dividing between gainers (11) and losers (9).
Some standouts amongst advancing issues were:
- Linear Technology (LLTC) up +28.93% on 334% higher than average volume
- Texas Instruments (TXN) up +7.85% on 329% higher than average trading volume
- Microchip Technology (MCHP) up +5.66% on 208% higher than average trading volume
Decliners which succumbed to the pressure of heavy selling were:
- Centene Corp (CNC) down -8.49% on 536% higher than average trading volume
- Gilled Sciences Inc (GILD) down -8.47% on 410% higher than average trading volume
- Under Armour (UA) down -5.12% on 192% higher than average trading volume
(See table below for complete Hillbent’s list of stocks trading on unusually high volume)
ETF Performance Summary
Equities: One comment worth noting is that today the Dow Jones Industrials (DIA) showed their first signs of rolling over as they made a new 5-day low and filled a gap. To its credit, it closed near its upper trading range, displaying strong relative strength like most of the US indexes. The prospect of a new all-time high for the Nasdaq-100 (QQQ) is becoming more of a possibility. However, our canary in the coal mine, i.e. Russell-2000 (IWM), while making new highs, remains 4.5% below its all-time high. the S&P 500 (SPY) continues to consolidate.
Finally, it would be remiss of me not to mention the VIX (VXX). It is extremely oversold and there is a high probability for a snap-back whenever the market decides to have another risk-off mid-life crisis. May I suggest buying call options or selling covered put spreads. Light a candle for the devil too as one can never tell.
Bonds: Treasuries (TLT) and Corporates (LQD) are finding support for now and could see a bounce in the next flight to safety cycle. However, judging from the price action of Treasury Inflation Protection bonds (TIP), the market has shelved the prospect of inflation for now. Another important development in the bond market is what appears to be a breakdown in High-Yield (HYG), which made a new 11-day low.
Currencies: The US Dollar (UUP) has retraced almost completed 61.8% of its bearish correction and continues to consolidate. The trend for the Euro (FXE) remains bearish and it is the weakest of the three major currencies. The Yen (FXY) gapped up today, catching a bid on speculation that the BOJ may not move as aggressively as expected, along with the prospect of dovish comments from the FOMC.
Commodities: The DB Commodities Index (DBC) and US Oil Fund (USO) are both trapped in bearish channels and descended to new lows. Gold (GLD) is still displaying resilience and even made a bullish reversal today. Overshadowing the markets is the US presidential election and the potential uncertainty of a Trump presidency. Like it or not, it is what it is and the market is non-partisan when it comes to political and money.
Real Estate: The DJ-Real Estate Index (IYR) and Residential Index (REZ) may have made new 2-day lows, but their bullish channels remain intact. The big story today was the Home Construction Index (ITB) which broke out to a new 6-month high today.