December 12, 2017

Daily Wrap

DJIA -28.57 (-0.23%)  S&P 500 -2.17 (-0.16%) NASDAQ -9.87 (-0.35%)

Sector’s lagging in the S&P today were:  Utilities -0.73%, Basic Materials -0.96%, Telecommunications -1.07% while the leaders were: Consumer Goods +0.20%, Financials +0.20% and Oil & Gas +0.14%.

Another morning where the S&P started higher but faced early selling.  If you were to just check in at the end of the day you would think today was a lack luster day in the market but if you were around it felt like a much more volatile than the ending prices reflect.  We posted at StockTwits the 5 minute downtrend line on the SPY just before noon and noted it could provide a trade for quick traders which did end up working well but still for more swing traders or investors it feels that we will ultimately see better (lower) levels.  This will be a point where I personally will start review points for scaling in or might start to focus on specific stocks that have performed better than the market during this decline.  The theory being that they will be potential leaders when the market turns and in the meantime might be a safer place to hide.  Included in that list would be QCOM and PCLN.

In the news today was a name we had been cautious on due to the fact we felt the stock has risen to levels that the fundamentals could not sustain, Walmart (WMT).  While WMT beat Q3 estimates, their revenues were light and forecast for Q4 was below analysts expectations.  Considering at the recent highs WMT’s dividend was down to 2% and a trailing PE of over 16, it is not a surprise to see a drop on these results especially in today’s environment.

Briefing.com reports the following noteworthy companies scheduled to report earnings before the open: CMRG, CYBX, FL, HIBB, SJM, SIRO

Back to the S&P.  Today the market made another attempt at trying to make a low and this time has an indecision candle on its side.

The positive:

  • We also have positive divergences on the 4 hour futures chart and a
  • McClellan in oversold territory which we have not seen since June.
  • Often when you have a trend going into a holiday or Op-EX, that trend continues to/through the date but Op-EX ends tomorrow

The Negative:

  • After strong moves like we have seen recently, bottoming tends to be a process and often comes with divergence on the daily chart which we do not have, yet.

Taking all of that into account we expect to see upside action in the near term and would use today’s low’s in the SPY of $135.18 to trade against but ultimately will keep trades shorter term looking for a better set-up to place a long term swing.


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