Trade Tweets Slam Stocks
August 23, 2019
Trade Tweets Slam Stocks
Major averages stumble for fourth week
The bulls tried to fight back this week but an inverted yield curve, disappointing comments on monetary policy from Fed Chair Powell and new tariffs from China on US goods erased the week's gains on Friday. For the period, the DJIA traded lower for the fifth time in six weeks dropping 257.11 points (-1.0%) and closed at 25628.90. The S&P 500 lost 41.57 points (-1.4%) and settled at 2847.11. The NASDAQ tumbled 144.22 points (-1.8%) and finished at 7751.77, while the small cap Russell 2000 was down for the sixth time in seven weeks falling 34.15 points (-2.3%) and closed at 1459.49.
Market Outlook: The technical condition of the market deteriorated last week. The DJIA, S&P 500 and NASDAQ all flirted with their 50-day moving average (MA) during the period but stalled at that key resistance level and closed back below their 100-day MA. The technical indicators for the different indexes finished the week in bearish territory and momentum, as measured by the 14-day RSI, was negative. Breadth was weak with the Advance/Decline lines for the NYSE and NASDAQ moving lower, while new 52-week highs contracted.
Cyclical Trend Index (CTI): The underlying premise of the CTI is that the market, as measured by the Dow Jones Industrial Average (DJIA), tends to move in cycles that often resemble sine waves. There are five identifiable cycles, each with different time durations at work in the market at all times.
Presently the CTI is Negative at -12, down six notches from the previous week. The counts for Cycles A, B, C, D and E are bearish. The CTI is projected to remain negative into September.
Momentum Index (MI): The market’s momentum is measured by comparing the strength or weakness of several broad market indexes to the DJIA. Readings of -4 and lower are regarded as bearish since it is an indication that a majority of the broader based market indexes are weaker than the DJIA on a percentage basis. Conversely, readings of +4 or higher are regarded as bullish.
The Momentum Index is Negative at -4, down four notches from the previous week. Breadth was mixed at the NYSE as the Advance/Decline line lost 233 units while the number of new 52-week highs out did the new lows on four of the five sessions. Breadth was also mixed at the NASDAQ as the A/D line decreased 1189 units while the number of new highs beat the new lows on three days. Finally, the percentage of stocks above their 50-day moving average jumped to 37.9% vs. 26.5% the previous week, while those above their 200-day moving average rose to 49.2% vs. 41.8%. Readings above 70.0% denote an overbought condition, while below 20% is bullish.
Sentiment Index (SI): Measuring the market’s Bullish or Bearish sentiment is important when attempting to determine the market’s future direction. Market Edge tracks 13 technical indicators listed below that measure excessive bullish or bearish sentiment conditions prevalent in the market. In addition, we track money flows into and out of ETFs which as of 8/21/19 shows outflows of $4.9 billion. Currently, the Sentiment Index is Neutral at +1, up a notch from the previous week.
Market Posture:Based on the status of the Market Edge, market timing models, the ‘Market Posture’ is now Bearish as of the week ending 8/02/2019 (DJIA – 26485.01). For a closer look at the technical indicators and studies that make up the market timing models, check out the 'Market Letter (Weekly)' located on the Market Edge home page. (www.marketedge.com)
Industry Group Rankings : What's Hot (25) – What’s Not (66). Of the 91 Industry Groups that we track, 25 are rated as either Strong or Improving while 66 are regarded as Weak or Deteriorating. The previous week’s totals were 39-52. The following are the strongest and weakest groups for the period ending 8/22/19. Strongest: Semiconductors & Related, Precious Metals, Toys and Home Construction. Weakest: Metals-Non Ferrous, Diversified Mining, Internet-Services and Coal. To review all the Industry Group rankings, click on the Industries tab.
ETF Center: The top performing ETF categories for the week ending 8/22/2019 were: Sector-Consumer Discretionary (+2.83%), Sector-Technology (+1.93%), Blend-Small Cap (+1.52%), Sector-Internet (+1.48%) and Sector-Industrial (+1.47%). The weakest categories were: Shorts (-1.69%), Bond-Government Long Term (-1.36%), Commodity-Base Metals (-0.81%), Commodity-Precious Metals (-0.81%) and Commodity-Agriculture (-0.72%). To review all the ETF categories in the Market Edge universe, click on the ETF Center tab.
Calendar of Technical Events:
**The above listed technical events occurred for the DIA on the date indicated. DIA is the ETF for the Dow Jones Industrial Average (DJIA).
Numbers To Watch:DJIA: 24680 - Support - The 6/03/2019 low
DJIA: 27398 - Resistance - The 7/15/2019 high
DJIA: 26608 - 50-day simple moving average
DJIA: 25617 - 200-day simple moving average
S&P 500: 2728 - Support - the 6/03/2019 low
S&P 500: 3019 - Resistance - 7/24/2019 high
S&P 500: 2947 - 50-day simple moving average
S&P 500: 2802 - 200-day simple moving average
NASDAQ: 7292 - Support - the 6/03/2019 low
NASDAQ: 8321 - Resistance - the 7/24/2019 high
NASDAQ: 8051 - 50-day simple moving average
NASDAQ: 7592 - 200-day simple moving average
”Dr. Market Edge Says" |
Dr. Market Edge has been involved in the stock market for over thirty years. He publishes informative articles every month that provide insight into the workings of the market and features of the Market Edge website. These articles are part of the Market Edge Education Institute located on the Market Edge ‘Home Page’. There are currently thirty-one articles ranging from how to interpret various chart formations to the proper placement of stop loss orders. Check them out today.
|Market Timing Models||Current Reading||Prior Week||Connotation|
|Cyclical Trend Index (CTI):||-12||-6||Negative|
|Strength Index - DJIA (DIA):||1.0||1.0||Negative|
|Strength Index - NASDAQ 100 (QQQ):||5.9||14.7||Negative|
|Strength Index - S&P 100 (OEX):||8.2||13.4||Negative|
|Dow Jones Industrial Average (DJIA):||25628.90||25886.01||-1.0%|
|S&P 500 Index:||,||2847.11||2888.68||-1.4%|
|NASDAQ Composite Index:||7751.77||7895.99||-1.8%|
|**Connotation is Positive or Negative Divergence from the DJIA|
|Momentum Index Components||Current Reading||Prior Week||Connotation|
|**Dow Jones Industrial Averages (DJIA):||25628.90||25886.01|
|**DJ Transportation Av||9739.74||9967.32||Negative|
|**S&P 500 Index||2847.11||2888.68||Positive|
|**NYSE Composite Index||12416.45||12580.41||Positive|
|**NYSE Advance-Decline Line||448076||448309||Negative|
|**10 Day MA Advance-Decline Line||0.99||0.97||Negative|
|**NDX 100 Index||7464.99||7604.11||Negative|
|**NASDAQ Composite Index||7751.77||7895.99||Negative|
|**DJ Utilities Index||832.03||831.22||Positive|
|Trin (5 Day Average)||1.26||1.82||Negative|
|NYSE Weekly New Highs-New Lows||373-440||363-398||Negative|
|Zweig Breadth Indicator||0.14||0.79||Negative|
|McClellan Summation Index||1836||1768||Positive|
|Unchanged Issue Index||0.02||0.02||Negative|
|Sentiment Index Components||Current Reading||Prior Week||Connotation|
|Fear-Greed Index(5 Day Avg)||23.00||23.00||Bullish|
|Shares Sold Short NYSE - Monthly (000)||16160130||16064731|
|NYSE Short Interest Ratio----(NYSE Only)||4.7||5.9||Bearish|
|Shares Sold Short NASDAQ - Monthly (000)||8106304||8104486|
|NASDAQ Short Interest Ratio||5.1||4.4||Bullish|
|AAII Bull-Bear Ratio||0.7||0.5||Bullish|
|Put/Call Ratio (5 Day Avg.- All Equity Options)||1.04||1.15||Neutral|
|Dividend Yield Spread||0.37||0.43||Bullish|
|NAAIM Exposure Index||70.2||58.1||Neutral|
|Bullish Investment Advisors||49.1||49.5||Neutral|
|Bearish Investment Advisors||17.9||18.1||Bearish|
|Bullish - Bearish Investment Advisors Ratio||2.7||2.7||Neutral|
|VIX (CBOE Volatility Index)||19.87||18.47||Neutral|