Courtesy of Blain.
Despite a big rally by Amazon, the action in the general indexes was weak which is a troubling development. We also now have some technical issues which we will discuss below. Indexes started with modest losses and those built through the mid afternoon; a surge in the closing minutes helped mitigate losses. The S&P 500 dropped 0.51% and the NASDAQ 0.62%.
“The biggest surprise of the week was the Bank of Japan. We’re still feeling the aftershocks of that,” said Art Hogan, chief market strategist at Wunderlich Securities.
It’s “somewhat of a risk-off week probably led by the inaction of the Bank of Japan,” said Eric Stein, co-director of global fixed income at Eaton Vance Management.
Chicago PMI for April was 50.4, below expectations of 53.0 and March’s 53.6 print. Any reading above 50 is still expansionary but this one was barely above 50. Personal spending rose 0.1% in March, while personal income rose 0.4%.
“Consumers are two-thirds of the economy and they’re not spending much. It’s going to be hard to get the data to look much better without them,” said Paul Nolte, portfolio manager at Kingsview Asset Management.
A strategist from UBS is saying the “end game” is here for this multi year rally based on 2 factors – of course many have said that before and been proven wrong but if you want to see his reasons feel free to read here.
“And while age alone does not portend the definitive end of a Bull Market,” Emanuel writes, “the current rally, at 2,611 days, is now the second longest in modern history, behind only the 1990-2000 bull market.
Things were looking fine in the S&P 500 yesterday with a shallow pullback to the 20 day moving average but that broke quickly Friday and now some more caution is warranted. As we wrote yesterday the NASDAQ already had issues breaking below the very key 200 day moving average. It sunk even further today and is rolling along the 100 day moving average now.
Regarding Thursday’s close: “When you get that kind of late-day price action when the market is higher most of the session then just pukes into the close, that means the tone has shifted under the surface,” said Mike Antonelli, equity sales trader at R.W Baird & Co. ”You’ve kind of run out of steam at 2,100.”
The Russell 2000 had cleared the 200 day moving average a few weeks ago, for the first time since August 2015. It pulled back to that level today – a break back below would be a bad sign.
The NYSE McClellan Oscillator stayed in the green yesterday but today’s fall obviously takes it below zero which always brings up a caution flag, especially if that sub zero reading sustains for more than 2-3 sessions. But with the combination of the bad action in the NASDAQ and a now negative reading in this indicator higher cash levels should be a goal.
Apple (AAPL) continues to – for lack of a better word – “suck”. It had broken below the trend line we had in purple (and the 200 day moving average) even before earnings, and the past 3 days have been just bad. In fact, this was the worst week for the stock since 2013. If it breaks those February lows of $92 it could get ugly so let’s see next week if buyers step up there.
Gilead (GILD) reported earnings that missed on both the top and bottom line. Pricing pressure in the hepatitis C market was among the factors weighing on the drugmakers results, although it did provide upbeat news for investors with a 9.3% dividend increase to 47 cents per share. This is the type of technical damage that will take quite some time to repair!
And with that the breakout in the biotech ETF (IBB) has now faltered.
Amazon (AMZN) and LinkedIn (LNKD) had nice days but certainly did not close the top half of their daily range which is what you prefer to see. LinkedIn in fact had double digit gains in after hours yesterday and today barely stayed positive!
Pandora’s (P) first-quarter sales beat analysts’ estimates as users spent more time on the service. The number of people listening to Pandora rose to 79.4 million from 79.2 million one year ago.
Baidu.com (BIDU) shares soared after profit fell, but revenue soared for the Chinese Internet group.
Have a good weekend and we’ll see you back here Monday.
