Trading Places with Tom Bowley

Want To Know Which Stocks In The S&P 500/NASDAQ Perform Best In November/December? Here They Are....

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U.S. Equities Power Forward Amid Very Overbought Conditions

Market Recap for Wednesday, October 18, 2017

The Dow Jones sliced through 23000 like a hot knife through butter.  Many times, these round numbers represent a psychological challenge for traders, but that was not an issue for this bull market.  Instead, the Dow Jones soared 160 points to yet another all-time closing high.  The S&P 500 and NASDAQ followed suit, posting fresh new highs of their own.  Leadership returned to financials (XLF, +0.53%) and technology (XLK, +0.25%) as the 10 year treasury yield ($TNX) turned higher and broke its recent downtrend.  Stock traders are excited about the prospects of another breakout in the TNX as that would signal additional selling in the bond market, aiding higher equity prices.  We need to see the TNX clear the 2.40%-2.42% area.

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Healthcare ETF Breaks Out Of Bullish Ascending Triangle Pattern, Leads U.S. Equities Higher

Market Recap for Tuesday, October 17, 2017

Healthcare stocks (XLV, +1.34%) led the Dow Jones to yet another all-time high close as the Dow traded above 23000 on an intraday basis for the first time in its history, closing just beneath that psychological level at 22997.  It was really about the Dow Jones on Tuesday as the S&P 500 and NASDAQ both finished close to their respective flat lines and the small cap Russell 2000 fell 0.34%.

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Banks, Insurance And Apple Lift Dow Jones Near 23K

Market Recap for Monday, October 16, 2017

In true bull market fashion, U.S. stocks rose once again in rather boring action.  The Dow Jones, S&P 500 and NASDAQ gained 0.37%, 0.18% and 0.28%, respectively, to each finish at all-time closing highs.  The record levels just keep printing amid extremely low volatity ($VIX) as stocks don't seem to have a care in the world.  We are now less than a week away from doing something on the S&P 500 that hasn't been done in the last 100 years.  In 1995-1996, the S&P 500 traded 241 consecutive days without a 3% pullback.  Our current streak is at 236 consecutive days.  It seems as though we're a week away from another milestone in this bull market.

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There's No Spooking The Bulls As Friday The 13th Results In New Record Highs

Market Recap for Friday, October 13, 2017

There are plenty of superstitious folks out there, but apparently the majority of stock traders don't fall under that umbrella.  U.S. equities again rose on Friday with the Dow Jones, S&P 500 and NASDAQ all climbing to all-time intraday highs.  Only the NASDAQ, however, was able to finish with a record high close.  The small cap Russell 2000 failed to join its larger cap counterparts in record territory as this index battles extremely overbought conditions and its tendency to struggle during the first half of October.

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Sectors Mixed, But That Doesn't Slow Down U.S. Equities

Market Recap for Thursday, October 12, 2017

It was certainly a bifurcated day among sectors.  Four sectors advanced, including industrials (XLI, +0.53%) and utilities (XLU, +0.52%), while five declined.  Financials (XLF, -0.76%) were hardest hit as the 10 year treasury yield ($TNX) has struggled to gain any ground since testing 2.40% yield resistance one week ago.  That helps to explain the relative weakness in financials over the past week as well.

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Broadline Retailers Move To Two Month High To Lead Major Indices

Market Recap for Wednesday, October 11, 2017

A strange pair - utilities (XLU, +0.43%) and technology (XLK, +0.33%) - combined to lead our major indices higher on Wednesday with the NASDAQ rising 0.25% to close at another all-time high.  Seven of the nine sectors ended the day in positive territory as only financials (XLF, -0.19%) and industrials (XLI, -0.06%) were down.  Among the major indices, only the Russell 2000 finished lower, dropping a mere 0.07%.  Overall, it was another solid day, especially considering that most indices and sectors were overbought entering the day.

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Late Day Buying Sends Dow Jones Into The Record Books Again

Market Recap for Tuesday, October 10, 2017

The Dow Jones finished 69 points higher on Tuesday to close at yet another all-time high.  It's an illustration of how equities can remain overbought for an extended period of time.  The Dow Jones moved into overbought territory (RSI 70+) 7-8 days ago, yet we've seen the Dow push higher nearly every day, rising 400 additional points in the process.  It underscores the reason why shorting is simply not an option.  Bull markets use rotation to their advantage and Tuesday was a perfect example.  Over the past month, the two worst performing sectors were utilities and consumer staples.  Care to guess what led the rally on Tuesday?  Yep, it was utilities (XLU, +0.97%) and consumer staples (XLP, +0.88%).  Keep in mind that leadership from these two defensive groups over a long period of time would not be healthy for U.S. equities as it would suggest a lack of sustainability.  But rotation to defense, especially when key support is being tested in those sectors, is fine in my view.  Check out the long-term weekly chart for both:

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Specialty Retailers Flash Short-Term Sell But Long-Term Buy

Market Recap for Monday, October 9, 2017

The U.S. major stock market indices took a breather - if you want to call it that - on Monday as the Dow Jones, S&P 500 and NASDAQ all fell less than 0.25%.  Only the Russell 2000 lost more than that, dropping 0.44%, but small caps benefited from a huge rally that began in mid-August so let's cut them a little slack.  While it may not have looked like much, the slight selling actually helped on the hourly charts as you can see below:

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Bull Market Resiliency Shines Through After Weak Jobs Report

Market Recap for Friday, October 9, 2017

Extremely overbought and extended conditions.  Complacency in the form of a very low Volatility Index ($VIX) reading.  Geopolitical tensions.  Then a negative jobs report.  The market was surely doomed on Friday, right?  Wrong.  That complacency, as evidenced by near record low readings in the VIX, is a signal that the stock market has the ability to overlook bad economic news - or any news for that matter.  And THAT, in a nutshell, sums up the market action from Friday.  The September nonfarm payrolls were reported at a minus 33,000!  That was 133,000 jobs short of the +100,000 consensus estimate.  Throw in the tighter than expected labor conditions and a big unexpected spike in average hourly earnings and talk of wage inflation surfaced.  The stock market's reaction?  One giant collective YAWN.  And it's the stock market's reaction -  the price action - that matters more to me than the fundamental news.

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