Stock Market Averages Fighting Internals

While stock market averages continue to fight off deteriorating Market Internals, today is a hugely important earnings day for a handful of stocks that have been in the ever narrowing group of market leaders.

Your trading game plan today will be much more stocks specific that the last ten days.

stock market averages

Monday was a very uneventful day for Major Market Averages as the DJIA, S&P 500 and NASDAQ all finished with gains of less than +0.2%.  This was just enough for the NASDAQ +0.17% to post its third consecutive all time high at 5218.86. the S&P 500 flirted with new highs all day until finally closing less than 3 points shy of 2130.82, the record from exactly 2 months ago.

The Russell 2000 retreated 0.5% for the second day in a row to settle at 1260.22, right at its 50 Day MA of 1258.

Market internals continue to stick out like a sore thumb as declining issues led advancers by greater than 2 to 1 on both the NYSE and NASDAQ.  In tandem with the negative a/d stats, Monday saw 299 fresh 52 week lows vs 112 new 52 week highs.

The Russell 2000 retreated 0.5% for the second day in a row to settle at 1260.22, right at its 50 Day MA of 1258.  Although the Russell is a capitalization weighted index, being the “bottom two-thirds” of the Russell 3000 its not heavily skewed by a dozen names that can heavily influence the average.

The Russell has often led market turns during the last 12 months, and rarely shows a wide disparity with market breadth on a daily basis.

NASDAQ has now rallied +1.08% the last 2 days, while making new  highs each day.  So much for the good news.  The internals are not only failing to confirm, they are diametrically opposed to the stats the raw index is posting.  On Friday the NASDAQ a/d was negative by 1½ to 1 and Monday that deteriorated to negative 2 to 1.

Eventually, something’s gotta give!

Maybe it’s just as well the S&P 500 didn’t post a new closing high.

The stats on market breadth are bad enough, without again highlighting the negative divergence that would be cast against new highs from both NASDAQ and the S&P 500.

Despite the paltry move from major stock indices, there was plenty of price action in other venues of the financial markets.

Oil continues to sell off amidst near capacity production in Saudi Arabia, Russia and the US.

Yesterday WTI traded below $50 for the first time since March, $48.75 is the low of the year for the NYMEX August contract, set on March 18, although it was not the front month at that time.

Gold traded at a 6 year low and frankly I can’t explain how it’s held up as long as it has, given that Central Banks around the globe have all but eliminated the need for an “ultimate safe haven” asset.stock market averages

Individual Corporate earnings are hitting the tape at a rapid pace.  

IBM reported last nite after the close. Unfortunately it was an example of what we’ve seen too many times already this earnings season. They beat EPS estimates, but missed on revenues.  This is a trend that if it continues will not be taken well by investors going forward

Today is a huge day for earnings from many stocks that have been producing the “Alpha” in an otherwise lackluster market.

Before the opening we’ll get earnings from VZ, UTX, TRV and HOG.

After the close we’ll hear from Tech Heavyweights AAPL, MSFT, GPRO, and VMW, as well as ACE (they’re buying Chubb) and CMG.

tanderson@mndpartners.com tjanderson56@gmail.com

Twitter: @TJAnderson1

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