Following up today’s 1.5% drop in the S&P500 $SPY, we take a quick look at market internals via 52-week highs/lows to see what they have to say.
This first chart is a YTD look at the number of NYSE stocks hitting new 52 week highs and lows. It’s quite clear to see the uptick in the number of new lows throughout the month of August to the highest levels seen all year. At the same time, the number of new highs has dried up.
The Dow Jones Transportation Average represented by the $IYT ETF has been a strong performer throughout May and June. It broke out to new all time highs on July 3rd, resolving a multi-month range sideways.
However, over the past week of trading, we’re seeing some near-term selling pressure come through, and a break of this accelerated bullish trend line.
Here’s the IYT on the daily:
Markets kicked off the week of Monday, July 17th choppy and mixed finishing relatively unchanged on the day. We’re heading into prime time earnings season which means potential sector/stock catalysts (positive or negative) could be right around the corner.
Here’s a short list of some of the swing trade setups that are on my watchlist over the next few days.
Given its earnings season, double check all of the report dates that follow.
The Russell 2000 $IWM is first up as it consolidates high and tight at this 142 area that has acted as resistance since early June. Today’s close was pennies away from all time closing highs.
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A quiet start to the Tuesday morning session progressively turned bearish as large cap technology and healthcare/biotech stocks saw selling pressure increase throughout the day.
The Nasdaq 100 is composed almost entirely of these two sectors so naturally it was hit the hardest.
As of the close today, here is what the incomplete weekly candle looks like:
There are 3 bearish characteristics to point out:
- A bearish engulfing weekly bar will be printed if we close below 139.28.
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It’s been a sleepy past two days in the market unless you’ve been concentrated in biotech and healthcare which has been working nicely to the upside while the rest of the sectors have been pulling back into nearby support zones.
Our current portfolio positioning is light in order to avoid some of this quiet chop, but here a few setups we’re looking at into the close of the day for potential new long entries.
Canadian Pacific $CP is breaking out from this trend-line extending from the June highs. If you were to zoom out and look at a weekly/monthly chart, notice the even bigger breakout in motion over this 155 area.
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Like it or not, the small cap index, Russell 2000 is breaking out in a big way.
We’ve been moving sideways since late 2016 and just this week we saw a gap and go sharp move to all-time highs and are in the process of resolving this 20-week range to the upside.
For all the bear attacks incoming, yes this move can fail, yes we’re overbought and yes, we do have plenty of headline risk over the near term with earnings, fiscal policies, government budget shutdown issues, etc. that could de-rail this move.