Afternoon Note
For me, technical analysis is very important. Although, for my long-term positions, it’s only 10% of the decision-making process; for trading, technical analysis takes a larger role. I always begin my analysis with a one-year chart and look at the basic trends and formations. For the most part, the Dow Jones Industrial Average has been in an uptrend featuring a series of higher highs and higher lows. However, it’s been having trouble getting into gear above 17,000, but some would call this phase of “consolidation;” a good spot to test resolve would-be sellers and firm up a foundation of support. I also enjoy using moving exponential averages such as the 50-day and the 200-day. The Dow Jones moving averages tell us that 16,976 is a key test on the downside, and the inability to hold leaves the index vulnerable to 16,500.
The purpose of this information is to help you decide whether or not you want to risk gains and ride a downside move; it goes back to whether you’re an investor or trader; most people can’t really decide. We’ve closed more ideas than normal in the last few sessions, simply out of near-term precaution. The dilemma is dealing with short term weakness, nevertheless, the idea is that the market should rally after the midterm elections.
NASDAQ Leading the Downward Charge
By Jennifer Coombs, Research Analyst
What a mess. Yesterday’s rally was completely negated today as all of the major equity indices are taking a massive nosedive without showing any signs of reversing. This painful dip is led lower primarily by the NASDAQ which is down almost 2% for the day – led by the tech sector, and namely Apple (AAPL) which decreased around 3% so far as the company deals with issues from bending iPhone 6s and its botched software update. Yahoo (YHOO) shares aren’t helping the NASDAQ either, trading down around 2% as investors sort through the value of the company following the sale of some of its stake in Chinese e-commerce giant Alibaba (BABA) last week. Come to mention it, Alibaba shares are also down roughly 2% today. We received three key pieces of economic data today: Durable Goods (see morning Hotline), Jobless Claims and Markit’s flash Services PMI reading – none of which should be cause to hurt the market this bad. The culprit may very well be Dallas Fed President Richard Fisher, who made comments in Rome today that the Fed could raise interest rates “sooner rather than later.” Nevertheless, the headline reports point to some economic progress.
The jobless claims report released by the Department of Labor was relatively positive. New jobless claims for the week ended September 20th came in at 293,000, compared to an upwardly revised 281,000. The four-week average has declined 1,250, demonstrating a steady decrease in overall new claims. Continuing claims for the week ended September 13th increased by 7,000 to 2.439 million, however, the 4-week average was reduced as demonstrating an 89,000 drop in claims. The unemployment rate for insured workers remains unchanged at 1.8%. With no special factors identified in the report, this reading on September unemployment points to improvement for the September employment report.
Similar to the manufacturing report earlier in the week, Markit’s flash reading of the services sector PMI failed to drastically impress the market. Growth in the services sector this month continues to be strong, but not quite as strong as in August. Markit’s preliminary reading came in at 58.5 (well above the breakeven level of 50), but was shy of the final reading in August at 59.5. However, this month’s flash reading was the same as the 58.5 flash reading for August, so perhaps the final reading will end up higher as well. According to the report, incoming orders showed one of the sharpest increased in the last five-years. Growth in backorders is also at a new five-year high, plus job creation is at its highest rate since June. Business outlook was also noted as being strong (highest level since June) and price data noted increases for salaries, food, and final goods. Although this report offers no explanation for the slowing headline number in September (details are not publically available), it ought to provide some confidence in the general economic outlook.
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3/28/2024 9:50 AM | LISTEN TO THE MARKET |
3/27/2024 1:40 PM | Mostly Higher |
3/27/2024 9:32 AM | U-TURN? |
3/26/2024 1:08 PM | Everything Is Up |
3/26/2024 9:42 AM | TAPPED OUT (I HOPE YOU AT LEAST GOT A T-SHIRT) |
3/25/2024 1:33 PM | Not A Mutiny |
3/25/2024 9:35 AM | STAYING THE COURSE…BEYOND TECH |
3/22/2024 12:56 PM | Toll on Americans |
3/22/2024 9:38 AM | A TAD TIRED |
3/21/2024 1:55 PM | Building on Gains |
3/21/2024 9:30 AM | A COMFORTING FED |
3/20/2024 1:33 PM | Pivotal Moment |
3/20/2024 10:00 AM | HERE COMES THE FED |
3/19/2024 1:33 PM | Picking Up Steam |
3/19/2024 9:35 AM | RUMBLINGS IN THE BOND MARKET |
3/18/2024 1:48 PM | Mag 7 is Back |
3/18/2024 9:39 AM | THE PARTY IN SAN JOSE WILL BE LIT |
3/15/2024 1:38 PM | Realtors Settle |
3/15/2024 9:33 AM | AN UNEASY PAUSE |
3/14/2024 1:43 PM | Sticky Inflation |
3/14/2024 9:48 AM | GOING TO A GO-GO |
3/13/2024 2:16 PM | Taking a Breather |
3/13/2024 9:51 AM | ALL SO EPIC |
3/12/2024 1:42 PM | Marching Higher |
3/12/2024 9:25 AM | ROTATION IN FULL SWING |
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