NASDAQ Composite (.IXIC) slips on trade concerns
U.S. stocks dropped on Tuesday as investors fretted over a hit to company earnings from the protracted U.S.-China trade dispute and reined in expectations of a big interest rate cut by the Federal Reserve later this month.
In the latest indication of the trade dispute hurting businesses, German chemicals giant BASF warned of a 30% fall in adjusted annual profit, while RBC Capital Markets downgraded 3M Co to “sector perform”, citing macro pressures from China, auto and electronics sectors.
China-exposed stocks slipped. Boeing Co , the single largest U.S. exporter to China, dipped 0.3% ahead of release of its orders and deliveries for the second quarter, while Caterpillar Inc declined 0.5%.
The Philadelphia chip index edged 0.21% lower, as chipmakers, which get a large chunk of their revenue from China, fell.
Stocks have retreated from their record closing highs since a robust June jobs report on Friday tempered expectations of an aggressive 50 basis point rate cut by the Fed.
“There is certainly nervousness over … the fact that no (trade) agreement has been reached nor seems that close and that the recent jobs report calls into question how quickly the Fed is likely to lower rates,” said Rick Meckler, partner, Cherry Lane Investments in New Vernon, New Jersey.
“Without the two items being favorably resolved, it’s hard for the market to push to even higher levels when it has gained already so much this year.”
The United States and China are set to relaunch trade talks this week after a two-month hiatus, but a year after their trade war began there is little sign their differences have narrowed.
Focus this week will be on Fed chief Jerome Powell’s remarks at his two-day testimony before the Congress, starting Wednesday. Also due on Wednesday is the central bank’s June policy meeting minutes.
At 9:37 a.m. ET, the Dow Jones Industrial Average was down 74.98 points, or 0.28%, at 26,731.16. The S&P 500 was down 6.77 points, or 0.23%, at 2,969.18 and the Nasdaq Composite was down 10.23 points, or 0.13%, at 8,088.16.
Banking stocks were down 0.29% ahead of a conference by the Fed to discuss the effectiveness of its stress tests for large lenders.
Network gear maker Cisco Systems Inc slipped 0.4% on a deal to buy optical component maker Acacia Communications Inc for $2.84 billion in cash. Acacia’s shares soared 34.9%.
Second-quarter earnings season is expected to start in earnest next week, where profits at S&P 500 companies are set to dip 0.2% from a year earlier, according to Refinitiv IBES data.
Declining issues outnumbered advancers for a 2.47-to-1 ratio on the NYSE and for a 1.70-to-1 ratio on the Nasdaq.
The S&P index recorded seven new 52-week highs and no new low, while the Nasdaq recorded 10 new highs and 14 new lows.
Overall, the bias in prices is: Upwards.
By the way, prices are vulnerable to a correction towards 7,861.40.
The projected upper bound is: 8,391.76.
The projected lower bound is: 7,891.51.
The projected closing price is: 8,141.63.
A big white candle occurred. This is generally considered bullish, as prices closed significantly higher than they opened. If the candle appears when prices are “low,” it may be the first sign of a bottom. If it occurs when prices are rebounding off of a support area (e.g., a moving average, trendline, or retracement level), the long white candle adds credibility to the support. Similarly, if the candle appears during a breakout above a resistance area, the long white candle adds credibility to the breakout.
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.
An engulfing bullish line occurred (where a white candle’s real body completely contains the previous black candle’s real body). The engulfing bullish pattern is bullish during a downtrend. It then signifies that the momentum may be shifting from the bears to the bulls.
If the engulfing bullish pattern occurs during an uptrend (which appears to be the case with NASDAQ COMPOSITE), it may be a last engulfing top which indicates a top. The test to see if this is the case is if the next candle closes below the top of the current (white) candle’s real body.
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 73.7187. This is not an overbought or oversold reading. The last signal was a sell 0 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 63.18. 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 24 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 76. This is not a topping or bottoming area. The last signal was a sell 1 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 21 period(s) ago.
Rex Takasugi – TD Profile
NASDAQ COMPOSITE closed up 43.346 at 8,141.728. Volume was 18% below average (neutral) and Bollinger Bands were 3% 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: 8,054.11 7,864.90 7,517.44
Volatility: 14 21 26
Volume: 625,477,248 575,440,640 599,053,696
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.
NASDAQ COMPOSITE is currently 8.3% above its 200-period moving average and is in an upward trend. Volatility is extremely low when compared to the average volatility over the last 10 periods. There is a good possibility that there will be an increase in volatility along with sharp price fluctuations in the near future. Our volume indicators reflect volume flowing into and out of .IXIC at a relatively equal pace (neutral). Our trend forecasting oscillators are currently bullish on .IXIC and have had this outlook for the last 15 periods.