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Wednesday, August 2, 2017

Daily update 8/2 Impact of FANG

Selling into a gap up again!

Since the 7/19 close of 2473 every close has been within 4 points of that.  That is an unusually tight range of closes.  We had similar streaks that started on 4/25and 6/2.  Curiously SPX closed 14 points above the close of the day the streak started then pulled back to the 50 SMA.  Should that pattern repeat exactly we should see a close at 2487 then the pullback.  That would be comical if it actually happened.  Breadth was -58% on the day the Dow closed above 22,000 for the very first time.  New highs were 133.  Oddly new lows spiked up to 52.  Very elevated considering SPX was only .16 below its high close.  The down volume was nearly 50% higher then the up volume.  Despite the new high close on the Dow this was a weak day. 

The futures took a dip this morning as the gap up sellers were more ambitious then the last two days.  Just like the last two days the selling stopped in the 11 o'clock hour.  Very odd.  The futures closed the day back above the 20 SMA.  There is clear resistance at 2475 now.  Day or night the futures sell off when they get above that level.  They just never get too far on the downside.

The red count crossed above the green line.  This sometimes brings out the buyers.  With the VIX closing at 10.28 I don't know if that will happen this time.

Both breadth indicators are negative.  The 10 DMA lines (2nd panel) have mostly been positive since the election.  I don't know if this negative cross will be more significant then the others, but it is Aug. This month has historically been the weakest month of the year.

The breadth has been weak for the last six days.  Only five Dow stocks made a new 52 week high today.  I do not know what caused the spike up in new lows.  That seems odd.  Clearly AAPL did not inspire tech buying.  All FANG stocks ended the day red.  Small caps were down over 1%.  Internally the market looks very tired.  The action in the transports is a little disconcerting.  That could be a sign the 2nd half economy might not be as strong as most people are expecting.  The market seems to be preparing for something bigger then just a simple pullback.  All that is needed is a catalyst, but who knows when it will come along.

This is a good look at the impact of FANG stocks the last 2 1/2 years.


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