Dow Jones Industrial Average (.DJI) Falls As Medical Stocks Massacred
A flat performance by the Dow Jones Industrial Average masked a real bloodletting in top stocks in the health care and pharmaceutical sectors. But stocks today also revealed some important sector rotation — the lifeblood of long-running bull markets.
Thirteen of the day’s worst 14 industry groups among the 197 tracked by IBD all came from the gigantic medical sector. An increased interest on Capitol Hill in paving the way for a single-payer universal health care system is unleashing a torrent of selling in small-, mid- and large-cap firms.
In contrast, media, banking and internet content stocks led the upside. Transportation stocks also attracted fresh institutional money. The Dow Jones transportation average rallied 1% as more railroads padded their gains following bullish breakouts.
At 10,935, the Dow transports raised their year-to-date gain to 19.4%.
Masimo (MASI) nose-dived more than 7% and took out its 50-day moving average in heavy trade, a key sell signal. Volume raced 134% above its 50-day average to 926,000 shares, the highest since Feb. 27. The patient monitoring systems expert has a market value of $6.5 billion.
Intuitive Surgical (ISRG) slid 6% and it too crashed through its 50-day line. The robotic surgery systems pioneer is now testing institutional buying support at its long-term 200-day moving average. It reports earning Thursday.
Vertex Pharmaceuticals (VRTX), the leader in cystic fibrosis treatments, dropped more than 7% in fast turnover and gouged its 200-day moving average. That negative action also triggers a defense-type sell signal.
Overall, the bias in prices is: Upwards.
The projected upper bound is: 26,951.61.
The projected lower bound is: 25,988.99.
The projected closing price is: 26,470.30.
A black body occurred (because prices closed lower than they opened).
During the past 10 bars, there have been 3 white candles and 7 black candles for a net of 4 black candles. During the past 50 bars, there have been 25 white candles and 25 black candles.
Three black candles occurred in the last three days. Although these candles were not big enough to create three black crows, the steady downward pattern is bearish.
Momentum is a general term used to describe the speed at which prices move over a given time period. Generally, changes in momentum tend to lead to changes in prices. This expert shows the current values of four popular momentum indicators.
One method of interpreting the Stochastic Oscillator is looking for overbought areas (above 80) and oversold areas (below 20). The Stochastic Oscillator is 83.8871. This is an overbought reading. However, a signal is not generated until the Oscillator crosses below 80 The last signal was a buy 3 period(s) ago.
Relative Strength Index (RSI)
The RSI shows overbought (above 70) and oversold (below 30) areas. The current value of the RSI is 63.77. This is not a topping or bottoming area. A buy or sell signal is generated when the RSI moves out of an overbought/oversold area. The last signal was a sell 36 period(s) ago.
Commodity Channel Index (CCI)
The CCI shows overbought (above 100) and oversold (below -100) areas. The current value of the CCI is 96. This is not a topping or bottoming area. The last signal was a sell 0 period(s) ago.
The Moving Average Convergence/Divergence indicator (MACD) gives signals when it crosses its 9 period signal line. The last signal was a buy 12 period(s) ago.
Rex Takasugi – TD Profile
DJ INDU AVERG closed down -3.121 at 26,449.539. Volume was 12% above average (neutral) and Bollinger Bands were 32% narrower than normal.
Open High Low Close Volume___
Short Term: Overbought
Intermediate Term: Bullish
Long Term: Bullish
Moving Averages: 10-period 50-period 200-period
Close: 26,330.07 25,858.43 25,300.78
Volatility: 9 12 20
Volume: 264,183,232 290,921,280 313,624,128
Short-term traders should pay closer attention to buy/sell arrows while intermediate/long-term traders should place greater emphasis on the Bullish or Bearish trend reflected in the lower ribbon.
DJ INDU AVERG is currently 4.5% above its 200-period moving average and is in an upward trend. Volatility is relatively normal as compared to the average volatility over the last 10 periods. Our volume indicators reflect volume flowing into and out of .DJI at a relatively equal pace (neutral). Our trend forecasting oscillators are currently bullish on .DJI and have had this outlook for the last 10 periods.
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