NASDAQ Composite (.IXIC) Can Large Cap Banks Join The Recovery?

NASDAQ Composite (.IXIC) Can Large Cap Banks Join The Recovery?

NASDAQ Composite (.IXIC) Can Large Cap Banks Join The Recovery?

  • NASDAQ Composite +0.13% Dow+0.60% S&P 500 +0.32% Russell 2000+0.12%
  • NASDAQ Advancers: 1488 Decliners:936
  • Today’s Volume (First Hour) +200.2%

The major indices opened higher for a fourth session with the Russell 2000 in record territory, but the gains seem less robust than in recent days.  Although today’s market volume today looks to be back to normal levels, volumes have been well below average since June 29 th suggesting the recent uptrend is likely more a sentiment indicator rather than a sign of new money flowing into the markets.

News flow remains light and better yet, there is little change on the trade war.  All sectors are fractionally higher with Energy the standout with a 1.5% advance.  Crude oil trades 0.8% higher ahead of inventory data tomorrow, treasury yields are slightly higher and the dollar index is up 0.2%.

  • Hopefully this doesn’t come as a surprise, but earnings season gets underway on Friday 13 when JP Morgan and Citi are scheduled to report. Investors and analysts are expected to focus on the impact of trade tensions on corporate profits this earnings season, as companies lay out their strategies to tackle such threats.  Factset data indicates earnings growth is expected to come in at 20%, and as things currently stand earnings growth should increase to 21.7% in Q3.  All sectors are expected to show grow with seven in double digits led by Energy and Materials.  Revenue growth is also looking strong with expectations increasing to 8.7% now from 7.9% a few months ago, and Energy, Materials and Tech should be in the double digits.  Lastly, forward 12-month PE on the SPX is 16.2, on par with its 5-yr average and a little above the 14.4 10-yr average.
  • Remember the ‘peak earnings’ theory bantered around at the end Q1? Analysts are not expecting earnings growth will top the 24.8% from the first quarter, but they aren’t expecting any meaningful downturn either.  Today’s WSJ discusses wage increases as somewhat of a wildcard going into earnings, which in itself is a shift from the low wage growth over the past decade.  Wages have increased in 16 of the past 17 months and seems to gaining momentum.  The risk is that higher wages may begin to show in earnings, and Goldman estimates for each percent of higher wages will reduce earnings by about 0.8%.

Overall, the bias in prices is: Upwards.

Note: this chart shows extraordinary price action to the upside.

The projected upper bound is: 7,939.10.

The projected lower bound is: 7,604.87.

The projected closing price is: 7,771.99.

Candlesticks

A black body occurred (because prices closed lower than they opened).
During the past 10 bars, there have been 6 white candles and 4 black candles for a net of 2 white candles. During the past 50 bars, there have been 32 white candles and 18 black candles for a net of 14 white candles.

A spinning top occurred (a spinning top is a candle with a small real body). Spinning tops identify a session in which there is little price action (as defined by the difference between the open and the close). During a rally or near new highs, a spinning top can be a sign that prices are losing momentum and the bulls may be in trouble.

Momentum Indicators

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.

Stochastic Oscillator

One method of interpreting the Stochastic Oscillator is looking for overbought areas (above 80) and oversold areas (below 20). The Stochastic Oscillator is 96.8325. This is an overbought reading. However, a signal is not generated until the Oscillator crosses below 80 The last signal was a buy 5 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 61.86. 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 12 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 buy 6 period(s) ago.

MACD

The Moving Average Convergence/Divergence indicator (MACD) gives signals when it crosses its 9 period signal line. The last signal was a buy 1 period(s) ago.

Rex Takasugi – TD Profile

NASDAQ COMPOSITE closed up 2.997 at 7,759.198. Volume was 21% below average (neutral) and Bollinger Bands were 18% narrower than normal.

Open High Low Close Volume___
7,770.6307,777.4837,731.9827,759.198 419,194,080

Technical Outlook
Short Term: Overbought
Intermediate Term: Bearish
Long Term: Bullish

Moving Averages: 10-period 50-period 200-period
Close: 7,588.13 7,498.80 7,117.42
Volatility: 16 14 19
Volume: 470,208,256 530,177,440 511,228,896

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.

Summary

NASDAQ COMPOSITE is currently 9.0% above its 200-period moving average and is in an downward trend. Volatility is Our volume indicators reflect volume flowing into and out of .IXIC at a relatively equal pace (neutral). Our trend forecasting oscillators are currently bearish on .IXIC and have had this outlook for the last 8 periods.

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