Only four trading days this week - and that was quite enough.
The markets sank again this week, with the S&P 500 down 1.2%, the NASDAQ down 3% and the Dow down 0.5%. The biggest loser of all was the Russell 2000, down a whopping 4.6% in just four days of trading.
The Dow, the NASDAQ, the Russell 2000 and the S&P 500 are all showing double digit losses year to date. Stocks have formally entered bear territory.
It seems like investors are grasping for anything positive. Sales at General Motors (GM) were terrible, but not quite as horrible as expected, and this instigated a rally on Tuesday. The next day Merrill Lynch downgraded the automaker and suggested that bankruptcy wasn't out of the question. The market went down again.
A bad earnings report and warning from Nvidia (NVDA) caused the semiconductor sector to sag and with it, the NASDAQ. A drawdown in oil inventories caused oil prices to increase and stock prices to decrease.
The June employment report held no particularly good news but was close to expectations. ISM services came in below expectations. To my surprise, these fairly negative reports did not send the market plunging, as "less bad" is now considered good enough
Yet, with the week complete, we can observe plenty of damage in the broad market.
An overview of the short-term technical picture is presented in the following chart of market statistics collected by our Alert HQ process. Each weekend we scan over 7200 stocks and ETFs looking for BUY and SELL signals. We also collect various technical information that we roll up into a chart like the one below:
We plot six different indicators. Again this week, they all reflect significant weakness in the broad stock market.
Moving average analysis
The bad news in the moving averages gets worse every week it seems. The number of stocks trading above their 20-day moving average dipped below 1000 this week. This is the lowest since I have been gathering this data.
Likewise, the number of stocks above their 50-day moving averages fell to just 1120. That is only 16% of the total number of stocks we evaluate.
These are the worst numbers since March.
The number of stocks whose 20-day moving average is above their 50-day moving average also continues to drop at a steady rate. We are not quite at the levels we saw at the March lows but we are extremely close. Barely one quarter of all stocks can now boast that they are trading in a bullish manner based on the 20-day MA above the 50-day MA .
Looking at buying and selling pressure
The Aroon analysis we do shows stocks in strong up-trends or down-trends. The chart shows the number of stocks found to be in strong up-trends dropped yet again last week. It is now under 8% of all stocks.
The number of stocks determined to be in a strong down-trend increased strongly this week and is closing in on 70% of all stocks we examined.
We also plot the results of Chaikin Money Flow analysis. The number of stocks undergoing strong accumulation or buying has now dropped to under 290. Not shown on the chart is the number of stocks shown to be undergoing strong distribution or selling. This indicator has now increased to over 2000.
S&P 500 Sector Analysis
The following charts summarize how the various sectors that comprise the S&P 500 are performing technically. The first chart below is from a month ago and shows results as of the end of May.
This next chart shows the results as of the end of this week, which includes the June month end:
It is easy to see the deterioration in all the sectors, though Energy seems to be hanging in there. The sectors most vulnerable to recession and the credit crunch have naturally plunged. This includes Financials and Consumer Discretionary. Technology was a bright spot that recently dropped out of favor. The latest casualties are Industrials and Materials.
Defensive sectors have had mixed results. Utilities are showing some strength, but Consumer Staples have not. Health Care has gone from mediocre to fairly weak.
In conclusion, I can only say that there seem to be few places to hide in this market downturn.
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This article has 10 comments:
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cynic69
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236 Comments
My Website
Jul 04 12:00 PM-
pitaking
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44 Comments
Jul 04 12:08 PM-
Edward Janeck
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133 Comments
My Website
Jul 04 01:55 PM-
edhaq$
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16 Comments
Jul 04 02:52 PM-
icandoitdon
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405 Comments
Jul 04 05:50 PMif you believe the market will be flat to down but not crash, you can hold cash and sell naked put and call options on broad indexes or on stocks you believe have the less dire prospects. i've managed to hold my own using this strategy, though it is not as lucerative as holding stocks in a roaring bull market. but it does beat the hell out of being long stocks in a bear market.
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chris_b
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5 Comments
Jul 04 10:57 PMI doubt if July will see the money turn much, especially with tension in Israel and Iran, strike threats in Brazil, and gasoline prices that have no business dropping. To those idiots saying oil will drop - that's total garbage. It will fluctuate, but with hurricane season on us, it's not going to drop much.
And big oil is making sure the green companies don't accomplish much, as people as seeing now that solar companies can't justify their valuations. Duh.
I feel July could improve some, and there are some stocks that will shine - nat gas, oil, energy, coal.. Maybe some safe havens like PG, and GE (if it can release some good news). Utilities will just sit stagnant I think.
These charts tell a lot, you just have to look.
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youngolf
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25 Comments
Jul 05 08:59 AM-
adan
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303 Comments
My Website
Jul 05 01:23 PMwhether i agree w/it or not, need it or not, i still think it's helpful to have
thanks!
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MARINE
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1 Comment
Jul 06 12:46 AMWake up everybody and smell the stench.The party is over.The avarice in the financial sector,along with zero oversight from the fed, has put this country and the rest of the world where we are today!
Help?. A knight in shining armor does not exist,just as a way out of the present financial condition this country is in.
Depression?.How many people that are now out of work, house and home are in a depression?.How many more are on the edge?.How many more will it take to be called a depression?.
Prospects?.What prospects are there when jobs have been shipped overseas by the thousands of super tanker size, all for the bottom line, with americans sleeping in their cars if they're lucky enough to still have one.
Outlook?.you and your family could be sleeping in your car soon.
Verdict?.Shame on all the greedy corporations and the government or better,lack off, that they could tell it to our face that they couldn't see this coming a long time ago.Shame on you all greedy,short sighted,paid off enablers who won't be paying for what you have engineered because of your over-flowing off shore and swiss accounts.
the outcome? disasterous.
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glacier32
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8 Comments
Jul 06 01:25 AMIs this the time to take a contratarin view of the market? Earnings will not be great but will not be bad either if we can borrow a page from ORCL. Their products cost millions but still sell if not sold more.