NASDAQ Composite (.IXIC) Mixed on Earnings and Economic Data

NASDAQ Composite (.IXIC) Mixed on Earnings and Economic Data

NASDAQ Composite (.IXIC) Mixed on Earnings and Economic Data

Tuesday’s market is similar to yesterday with the Nasdaq, Dow and S&P-500 little changed, but today the R2K index is 0.55% higher.  

Brian’s technical piece below offers some interesting insights into the Russell Index.  Market volumes out of the gate are about 3% stronger than yesterday, but volumes have been consistently below average since July 1st.  

Earnings results and economic data are the main drivers with plenty of data for investors to sort through.On the earnings front, are money center banks JP Morgan, beating on top and bottom lines but lowered its net interest income outlook; Goldman Sachs also beat on top and bottom lines; and Wells Fargo also beat but said FY19 expenses will be at the high end of the expected range.  

JP Morgan is trading 0.3% higher, Goldman is up 1.8% and Wells Fargo is off 1.6%.  Also today, trucking and logistics firm JB Hunt beat on revenues and EPS and trades 8% higher; Charles Schwab beat on the top line with in-line revenues, and trades 3.5% higher; Domino’s Pizza shares are off nearly 8% after reporting weaker revenues across all segments; and Wintrust

Financial is off 6.5% after missing on earnings and higher expenses.Although earnings are front and center, the rate debate hasn’t gone away.  Now that the Fed seems inclined to cut rates, the economic data suddenly looks much healthier that it did in recent months.  

That is the case with today’s batch of economic data, and in response the dollar rallied and treasuries declined as yields spiked with the 10-year treasury now yielding 2.127%.  

On the heels of strong results in May, retail sales in June easily surpassed expectations.  Top-line retail sales grew 0.4% in June versus consensus of just 0.2%, and ex-autos sales also grew 0.4% versus consensus of 0.1%.  The sales control group excludes car dealers, food services, gas stations and building-material stores, and this measure grew 0.7% in June while analyst expected just an 0.3% gain.  

Furthermore, May’s control group reading was revised higher by 0.1%.  Next up is Manufacturing Production, which increased 0.4% versus analyst consensus of 0.3%.  

Total industrial production, which includes mines and utilities, was flat in June and missed the 0.1% gain expected.Not all the data was rosy of course.  

Capacity utilization, a reflection of the amount that factories are in use, fell to 77.9% in June from 78.1%.  Factory production declined to a 2.2%% annual rate, the lowest since 2016, and Fed regional surveys generally reflect softening conditions in June.  

If Shakespeare were the Fed Chairman he might say – to cut, or not to cut, that is the question.One potential speed bump for the market is the federal government, which runs out of money in September.  

House Speaker Pelosi says that she wants agreement in place before congress breaks for summer recess.  That sounds reasonable enough, except that we only have eleven days including today and a weekend before Congress departs.  

Regardless, this is something to keep in the back of your mind.The sector view is mixed with Materials leading with an impressive 0.9% gain while Industrials follow with a 0.8% advance.  

At the other end are Utilities, down 0.6% and Healthcare and Technology, both off 0.3%.  

In the commodity pits WTI crude oil gains 0.5% and partially recoups yesterday’s losses, but natgas is off 0.3%.  Gold eases by 0.1% and the dollar index advances 0.4%.

Overall, the bias in prices is: Upwards.

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

By the way, prices are vulnerable to a correction towards 7,931.23.

The projected upper bound is: 8,468.40.

The projected lower bound is: 7,979.55.

The projected closing price is: 8,223.97.

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 26 white candles and 24 black candles for a net of 2 white candles.

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 89.8181. This is an overbought reading. However, a signal is not generated until the Oscillator crosses below 80 The last signal was a sell 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 64.85. 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 buy 29 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 90. This is not a topping or bottoming area. The last signal was a sell 0 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 26 period(s) ago.

Rex Takasugi – TD Profile

NASDAQ COMPOSITE closed down -35.388 at 8,222.797. Volume was 16% below average (neutral) and Bollinger Bands were 12% narrower than normal.

Open High Low Close Volume___
8,251.6598,259.7478,204.2258,222.797 473,988,096

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

Moving Averages: 10-period     50-period     200-period
Close: 8,180.49 7,877.22 7,523.03
Volatility: 9 20 26
Volume: 473,957,824 570,762,112 592,251,712

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 9.3% 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 moderate flows of volume into .IXIC (mildly bullish). Our trend forecasting oscillators are currently bullish on .IXIC and have had this outlook for the last 20 periods.

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