US Stock Short And Intermediate Term Trends Have Change From Up To Down

U.S. stocks dropped sharply this morning at the open,  major indices fell by an average of 1.5% now. Portuguese lender Banco Espirito Santo 's  huge net loss in earning led to its stock dropped a record 50 percent on Thursday's trading. Eurozone inflation rate slowed to its lowest level in nearly five years and brought about the economy is too weak to push price growth concerns. Argentina debt defaulted the second time in 12 years and may led to financial crisis. EU and the U.S. strengthened Russia economic sanctions has led to concern that the EU economy will also be hurt. These negatives all contributed to sharp losses in European stock markets . Germany's DAX index fell by nearly 2%. In the U.S., July Chicago purchasing managers index came in at  52.6 much lower than the 63.2 consensus. Yield of the 10 year treasury continues to rise today reflecting worry that the Fed may hike rate early.  In addition to all the above mentioned negatives,  former Federal Reserve Chairman Alan Greenspan said after a long and big recovery in the stock market, investors should expect sharp pull back some time. The US stock market is under tremendous down side pressure and down turn likely continues. Technically,  the Dow and the S & P 500 have dropped below their 50 day moving averages while the Russell 2000 fell below its 200 days moving average. U.S. stock market's short and intermediate term trend have changed from up to down. Dow will likely fall toward its 200 days moving average 16316 level near term.  Dow, Nasdaq, S & P 500 and Russell 2000 near term supports are 16641,4360,1910 and 1100 respectively .

List Of Warning Signs For The US Stock Market

Is the US stock market ready for a larger correction? The followings are 10 warning signs:

1. Half of Dow Jones Industrial Index components are in  down trend. Components that are trading below their 200 day moving averages are BA, GE, MCD, PF, UTX, WMT, PFE and KO. Componets that are trading below their 50 day moving averages are JNJ, TRV, AXP, DD, CAT, V and MMM.

2. The Russell 2000 is on the verge of breaking its 200 day moving average while the Dow is on the verge of  breaking below its 50 day moving average.

3. Major and influential stock sectors that are in down trend : Semiconductor (SOXX), Industrials (XLI), Home Builders (XHB), Retailers (XRT), Consumer Staples (XLP) and Shipping (SEA).

4. 10 year treasury yield jump significantly on concern that interest rate are rising on the news of better than expected 2nd quarter GDP.

5. Major European stock markets such as Germany, UK and France are forming bearish Rounding Top Patterns. Their weakness will likely negatively impact the US market.

6. Second quarter earning reports are winding down. There will be lesser positive news to help the market. 

7. European Union and US have executed economic sanctions against Russia.

8. Argentina is technically in default and may bring about financial crisis.

9. Geographical unrest still going on in Ukraine, Gaza, Syria and Libya.

10. August and September combine are the worst 2 months for stock since 1950.

Weakness In Dow Is No Good For The Market

Weakness in the  Dow Jones Industrial Average will likely dragged down the U.S. stock market. Today, the Dow fell below its 50 day moving average 16873 level, its trend has been changed from up to down. Dow's next important support level is 16638. Inside the Dow,  stocks trade below 200 day long-term moving averages are: BA, GE, MCD, PG, UTX, WMT, PFE and KO. Stocks trade below intermediate term 50 day moving average are : JNJ, TRV, AXP, DD, CAT, MMM and V.

 

Stock Market Trend Is Still Up

Dow, Nasdaq, S & P 500 and Russell 2000 are now trading at 16938.25 +31.56, 4406.11 +16.65, 1172.82 +3.98 and 1967.70 +0.64 respectively. Today's strong sectors are solar TAN, Gold GDX, social networking  SOCL, Internet FDN, software IGV and networking IGN. Weak sector is utililites  XLU. Standard & Poor's 500 biggest gainers are: AA +4.3%, HAR +2.8%, RAI +2.6%. The largest decliners in the S & P 500 are: GRMN -5.9%, MU-1.9%, PCL-1.8%. 10 year bond yield rose 0.014% to 2.578%. August crude futures fell $ 0.74 to $ 102.66 a barrel. August gold futures rose $ 9.4 an ounce to $ 1,325.90.


U.S. stocks opened up this morning and have been rising slowly. Major indices rose by an average of about 0.2%. After two days of sharp drop, U.S.  stocks are rebounding.  Better than expected Alcoa (AA) earning and calm European markets helped. Technically,  Dow, S & P 500 and Nasdaq were able to hold their 20-day moving average support yesterday. These levels are 16886,1958 and 4381 respectively. Technically the stock market trend is still up. It will be a buy signal if the Dow can regain 17,000 level.  Analysts are generally optimistic on the second quarter corporate earnings and this is should bode well for the market. Minutes of the Fed's June meeting will be released at 11:00AM Pacific time today. This will likely cause market volatility and possibly a trigger for rally. Dow, Nasdaq, S & P 500 and Russell 2000's  major resistances are 17000,4425,1985 and 1181 respectivley. Supports are: 16886,4381,1958 and 1167 respectively.

Stock Market Will Likely Go Up Again After Dow Finished Restesting 17000

Dow, Nasdaq, S & P 500 and Russell 2000 closed  at 17024.21-44.05,4451.53 -34.40,1977.65 and 1186.87-21.31 respectively. Today's strong sectors are Utilities XLU, TechnologyXLK  and Consumer Staples XLP. Weak sectors are solar TAN, biotechnology IBB, gold GDX, home builders XHB, social networking SOCL, software IGV, retail XRT and transportation IYT. Standard & Poor 500's biggest gainers are: PETM +2.2%, AAPL +1.9%, COH +1.9%. The largest decliners in the S & P 500 stocks are: CHK -4.7%, DAL-4.6%,  BTU-3.6%%. 10year bond yield fell 0.031 percent to 2.617 percent. August crude futures fell $ 0.59 to $ 103.47 a barrel. August gold futures fell $ 1.2 an ounce to $ 1,319.40.


U.S. stocks opened down this morning, and stayed down at the close. Russell 2000 Index and the Nasdaq Composite fell the most, a decrease of approximately 1.7% and 0.8% respectively. I think the big drops in Russell 2000 is probably due to confusions and adjustments from last week's annual stock adjustments and is not a trend. The Dow and S & P 500 fell by a smaller amount of 0.3% and 0.4%, respectively. There's no economic news to drive the stock market today. However weak European stocks have caused U.S. investors to take profit.  Last week, the S & P 500 and the Dow both made new highs. Dow has broken above the psychological barrier of 17,000 and stock market momentum is up. The fact that the the Dow can hold above 17,000 level today is good performance. The general market will likely go up again if the Dow can stay above 17,000 level for another day or two. S & P 500's 2,000 level is the next key resistance level and this level will serve like a magnet in pulling the general market up. Second-quarter corporate earnings report starts tomorrow, the generally optimism about the 2nd quarter corporate earnings should serve as catalyst for the market's further advance. Dow, Nasdaq, S & P 500 and Russell 2000's  major resistances are: 17200,4500,2000 and 1213 respectively. Supports are: 17000,4424,1975 and 1185 respectively.

Factors Bullish For Stocks Short Term

Bullish factors for the US stock market in the short term:

1. Dow and S&P 500 at all time high, momentum is up.
2. S&P 500's 2000 round number will serve as an magnet pulling stocks up
3. Immediate reported 2nd quarter earnings reports are likely to be good
4. Investors and fund manager have been shorting stocks to hedge their portfolio is bullish as they cover.