Why The Market Is Shrugging Off Bad News
The morning after the “Turk”
visited, the markets continue to the positive side. This despite the fact that
the August Philly Fed index actually dipped into negative territory in August at
-3.1 (6.6 in July). This number indicates a decline in manufacturing activity in
the Philly Fed region. It has not been negative since December, 2001.
Prior to the Philly announcement, the major indexes were struggling to stay in
the green with stocks bouncing in and out of the red throughout the morning. The
markets were trading at their best levels of the session when the negative
Philly Fed number came out.
The Dow Jones Industrial Average
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was close to hitting its 50-day moving average (8878.84) then pulled back. Its
intraday high is 8854. Up volume is exceeding down volume by a 2.4-to-1 margin.
There are 31 new highs and 43 new lows on the NYSE.
The S&P 500
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is fighting to stay positive after touching its 50-day moving average (935.85).
On the Nasdaq Composite
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$COMPQ |
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positive first half of trading has turned negative for the tech heavy index. The
overhead resistance is the 50-day moving average (1382.42). So far, there are 37
new highs and 79 new lows on the Nasdaq.
Some of the stronger sectors on the day are:
Entertainment, Broadcast, Retail
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$RLX.X |
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PowerRating), Oil
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$XOI.X |
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$BKX.X |
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PowerRating), Gold
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$XAU.X |
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PowerRating), Restaurants, Aluminum, Auto,
Homebuilding, Software
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$GSO.X |
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PowerRating), Semiconductors
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$SOX.X |
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and Biotech
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BTK.X |
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The weak sectors thus far are: Airline
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$XAL.X |
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PowerRating),
Chemical, Wireless Service, Footwear and Tobacco.
Immucor
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BLUD |
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is rallying from a pull back from the high with increasing volume. BLUD pulled
back to test its 50-day moving average and is now attempting to break above its
20-day moving average. BLUD has a
TradingMarkets.com RS3 rating of 96 and an up trending
ADX of 21.
United Technologies
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UTX |
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hammered the last two sessions from the ripple affect from the Airlines ($XAL.X).
UTX lokks like it has found its footing at this point. This is the 50%
retracement level (58.78) drawn from the Sept. 2001 low to the March high.
Volume is very strong once again today.
Inter-Tel, Incorporated
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UTL |
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breaking out to a new 52-week high with increasing volume. INTL has a
TradingMarkets.com RS3 rating of 90 and an up trending
ADX 22. INTL looks to have initial resistance at 23.50. From this
initial breakout, INTL has run up quickly. We could see a pull-back to around
20.75.
Advanced Auto Parts
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AAP |
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rallying from a 1,2,3 bottom on unusually high volume for this time of the day.
It is close to hitting its 50-day moving average, which also happens to be its
50% retracement line. (The retracement is from the low in March to the high in
May). Support is at 47.00.
Dentsply Intl
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XRAY |
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breaking out above the 40 resistance with very strong volume. XRAY has a
TradingMarkets.com RS3 Rating of 91 and an up trending
ADX of 30. If XRAY pulls back, it could try to retest the 40 support
line.
The market internals are weakening at this point.
It appears that the Philly number caught many traders by surprise and now we are
starting to see some heading for the exits.
Nasdaq Breadth:
Adv: 1424 UpVol: 326044406
Dec: 1703 DnVol: 607858120
Net: -279 Net: -281813714
NYSE Breadth:
Adv: 1424 UpVol: 326044406
Dec: 1703 DnVol: 607858120
Net: -279 Net: -281813714