Investors Looking Today for this Hint…
Stocks on Wall Street closed off on Tuesday as the weakness in pharmaceutical and financial companies sent the S&P 500 and the Dow Jones to their first 2-day losing streak in over a month. Pharmaceutical stocks traded under pressure after President Trump twitted that he’s working on a “new system” to reduce the price of pharmaceutical drugs in the industry. As is his wont, Trump provided headlines but little in the way of details. Likewise, Trump backed the draft of the bill released yesterday by Republicans in an attempt to replace the current Obamacare program, still noting though, that the bill was open to negotiation. The health sector (XLV) fell 0.7%.
The financial sector (XLF), the best performing sector since the November elections, shed 0.3% on the background of a drop in the prices of banking stocks like Wells Fargo (WFC) and J.P. Morgan (JPM). Investors are priming themselves for a rate hike announcement next Wednesday after the FOMC meeting. A number of senior central bank members, including its chair, Janet Yellen, insinuated the high probability of a rate hike this coming week in their speeches last week. Friday’s employment report is the main release that stands in the way of the Fed and a rate hike. It’s hard to even imagine how disappointing figures need to be to sway the Fed from its rate hike trajectory.
In summary for the day, the Dow Jones fell 0.14%. The S&P 500 shed 0.9%, the NASDAQ retreating 0.26%. The Russell 2000 dropped 0.7%. Gold continued losing ground, falling for the sixth consecutive day, while crude ended off 0.1% at the level of $53.14 a barrel. Crude relinquished gains accrued earlier in the trading day after Khalid A. Al-Falih, Saudi Arabian Minister of Energy, Industry and Mineral Resources, stated that the historic agreement fusing together OPEC and non-OPEC countries in the aim to lower supply and raise prices has improved market fundamentals. At the same time, he added that Saudi Arabia will curtail production for only a limited amount of time.
One of the stocks standing out in yesterday’s trading was Dick’s Sports, which fell 8.6% after its earnings results missed, the company likewise releasing weak guidance. Pandora (P) tumbled 6.5% after Liberty Media, CEO Greg Maffei, told investors yesterday in a conference held by Deutsche Bank, that the stock is overpriced and that therefore, Pandora is not on its radar for a takeover.
The new release, Snapchat (SNAP) continued disappointing, dropping by another 9.8% to the $21.44 level. Wall Street analysts are giving the company a lukewarm reception after the company came out on a tear this past Thursday. The high price levels the stock has reached have enticed more than a few short players.
The key to the market’s strength ever since a rally carried it higher back in November, was the strong performance at closing. Before this past week, we hadn’t seen any weak closes on the S&P 500 for 2017 – and now we’ve seen two weak closes on the S&P 500 in the last 4 trading days! Indexes closed near their daily lows yesterday and last Thursday. The declines until now have been minimal but the weak closes coupled by the drop in the number of stocks hitting new 12-month highs, is noteworthy. Yesterday, we saw 120 stocks rallying to new 12-month highs, 100 falling to new yearly lows. That’s not the ratio we’d expect to see with indexes so close to their all-time highs. We’re still not ready to announce that the trend has changed, but the uptrend is under pressure and the technical movement has been seeing some hitches. The weak close at the end of the day and the ratio of stocks at 12-month highs to those at 12-month lows, hints at a change in the market’s character. It’s still too soon to be bearish, but caution is required at this point on the part of every intelligent investor.
On the S&P 500, 17 stocks rose to new 52-week highs, 12 dipping to new yearly lows; on the NASDAQ, 52 stocks recorded new 52-week highs, 59 falling to new yearly lows.
All-in-all, 6.44 billion shares changed hands on U.S. exchanges, beneath the 6.92 billion average over the last 20 trading days.
Wednesday: Traders are likely to be given a hint today into what to expect in the critical official employment report to be released this Friday; from that report, they hope to gauge the strength of the argument for hiking rates this coming week. The ADP survey, which measures the number of new private sector jobs, will be released today before opening – the survey expected to highlight 190 thousand new February jobs. In January, the ADP survey caught players off guard with a reading of 246 thousand new positions. In the event today’s figure comes out near the consensus, that will signal that Friday’s figures also won’t sway much from the market’s consensus. In essence, Friday’s reading is the last figure that the market will get before the Fed decides whether to hike rates next week. Only an exceptionally low number on Friday could derail the Fed’s intents to hike rates come next week.
Other economic figures that will be released today include January’s wholesale inventories. China is also in focus after its trade balance figures were released last night. Also on the radar screen, last week’s crude reserve figures will be released today at 10:30, analysts projecting an accumulation of 2 million barrels.
The reports that will be released today before opening include BOBE, PLCE, and EXPR. After closing, be primed for the release of ELF and UNF.
Wednesday’s Hot Stocks: GEO, HRB, BOJA, SNAP, BOBE, PLCE, EXPR, URBN, CIEN
Have a great trading day!
|Wednesday||8:15||ADP Employment Change||180K||Medium|
|Thursday||8:30||Export Prices ex-ag.||–||Medium|
|Thursday||8:30||Import Prices ex-oil||–||Medium|
|CASY||Casey’s General Stores, Inc.||PM||Monday|
|THO||Thor Industries, Inc.||PM||Monday|
|DKS||Dick’s Sporting Goods, Inc.||AM||Tuesday|
|NAV||Navistar International Corporation||AM||Tuesday|
|URBN||Urban Outfitters, Inc.||PM||Tuesday|
|UNFI||United Natural Foods, Inc.||PM||Wednesday|
|SIG||Signet Jewelers Limited||AM||Thursday|
|PAY||VeriFone Systems, Inc.||PM||Thursday|
|ULTA||Ulta Beauty, Inc.||PM||Thursday|
Today’s Picks – Day Trading!
New York Strategy Swing
Today’s Picks – Swing “New-York Strategy
No.1 – FTNT
|Sector||Technology | Application Software|