The Stock Market May Be In The Middle Of A Major Transition
It feels as though the dynamics of the stock market may be changing. Although I can’t say it for sure yet, I feel like the more companies I research and watch, the more reasons I find for stocks to move lower, rather than to rise. The charts are also not looking solid in many cases, and that would suggest to me the market may be going through a transition currently. I will continue to think on this and report back as I find more evidence to support this theory. The market could be transitioning more to a stock specific market and less of a sector related market.
The S&P 500 continues to fail around 2,660, and I’m not sure what that means at this point, other than it being a negative sign.
The technology XLK also failed to continue its rise from yesterday, falling below $66.
But again, Facebook continues to rise closing above $166. The stock may continue to work higher from here.
But Amazon continues to struggle, at $1,440. I drew in new downtrend today as well. For a stock that is set up to report results in the next couple of weeks, the stock is not acting like results will be strong. It seems like the direction could change with a just a mere tweet though. But the longer it stays below $1440, the more the odds of decline further are.
Netflix got a bunch of price target increases ahead of Monday’s results. Cowen went to $350 from $275, Goldman going to $360 from $315, Raymond James going to $330 from $290. Shares were up most of the day but gave back some going into the end of the day.
The longer-term pattern in the stock chart continues to be bullish, and a breakout could come after results, with a rise back into the $330. I wrote up my outlook for the stock over the weekend.
The Consumer stocks failed at resistance today, and as long Amazon is stock is struggling the ETF will go nowhere. Amazon has an enormous 20 percent weighting in the ETF, with Home Depot being the second largest at 7 percent!.
Right now, it feels like there a bunch of mixed signals taking place in the market. Biotech stocks continue to struggle. Financials have a big day coming Friday, while Materials don’t look particularly strong either.
But the good news is that the 10-year continues to trend lower, and is currently at 2.79 percent, while the dollar remains relatively unchanged.
Earnings will need to be better than expected to get the whole market moving higher. Otherwise, it is starting to look a market that is going to be stock specific. We’ll see how things come together over the next week or so.
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