Trading Places with Tom Bowley

Transports Soar To Lift Wall Street To Yet Another Record

Tom Bowley

Tom Bowley

Chief Market Strategist, EarningsBeats.com

Special Note

I am on vacation this week so I'll post mostly abbreviated blog articles.  There will be no blog article on Friday morning.

Market Recap for Friday, July 12, 2019

Industrials (XLI, +1.75%) powered our major indices to fresh new all-time highs.  Transports ($TRAN) were particularly strong as truckers ($DJUSTK, +4.51%), airlines ($DJUSAR, +1.79%), and railroads ($DJUSRR, +1.58%) all had solid days.  The DJUSAR broke to a new 2019 high:


Last Tuesday, I had posted the above chart showing the key price resistance.  Yesterday's big advance cleared that resistance, a very big positive for transports.

Meanwhile, healthcare (XLV, -1.11%) lagged badly as both pharmaceuticals ($DJUSPR, -2.15%) and biotechs ($DJUSBT, -1.73%) stumbled on Friday.  The latter group was hurt by Illumina (ILMN, -16.12%), which warned about its upcoming Q2 earnings and then lowered its outlook for the balance of the year.  ILMN had been a leader among biotech stocks.  Seeing a leader produce such a weak outlook is not what this group was looking for during its most bullish calendar month historically.

Pre-Market Action

Much can change between this evening and tomorrow morning, but U.S. futures are pointing to a slightly lower open.  Dow Jones futures are currently lower by 36 points with a bit less than 12 hours to tomorrow's opening bell.

Current Outlook

The S&P 500 remains in the up channel that I illustrated last week.  Here's a refresh of the chart included in Trading Places:

If we get a test of the upper channel line early this week, it could signal the start of a brief period of consolidation.

Sector/Industry Watch

Transports ($TRAN) broke out from a bottoming reverse head & shoulders pattern on Friday:

That's good news as a strong transportation group usually coincides with a major stock market advance.  One day of bullish behavior doesn't make a major trend, but given how weak this area has been, it's a very nice start.

Historical Tendencies

The S&P 500 has produced the following annualized returns within the month of July since 1950:

July 1-17:  +24.70%
July 18-24:  -18.72%
July 25-31:  +19.12%

Key Earnings Reports

(actual vs. estimate):

C:  1.78 - estimate

(reports after close, estimate provided):

JBHT:  1.35

WTFC:  1.65

Key Economic Reports

July empire state manufacturing survey to be released at 8:30am EST:  +0.5% (estimate)

Happy trading!

Tom

Tom Bowley
About the author: is the Chief Market Strategist of EarningsBeats.com, a company providing a research and educational platform for both investment professionals and individual investors. Tom writes a comprehensive Daily Market Report (DMR), providing guidance to EB.com members every day that the stock market is open. Tom has contributed technical expertise here at StockCharts.com since 2006 and has a fundamental background in public accounting as well, blending a unique skill set to approach the U.S. stock market. Learn More