Stock Market Highlights - Week 27
- Greece defaults on $1.7 billion IMF payment.
- WTI closed 7/2 at $56.93 and Crude Oil $62.07. The lowest in a month.
- BP Agrees to Pay $18.7 Billion to Settle Deepwater Horizon Oil Spill Claims.
- U.S. Pending Home Sales at Highest Level in Nine Years.
- Aetna to buy Humana for $37 billion in largest insurance deal.
The Dow Jones Industrial Average (DJIA) closed at 17730.11 on Thursday, July 2 2015, which was a 1.02% decline versus a week ago of 17946.68 on Friday, June 26th 2015. The DJIA is still in a trading range between 17700 and 18200. It appears to have tried to break through 17600, but quickly bounced just above the 200 DMA. Until we see some kind of sustained break, this is just another choppy market to be trading in.
After retesting 17600, the stochastic (STO) indicators bounced off STO 20 and it is now working off oversold territory. As we had mentioned last week, "We shouldn't be surprised to see a retest of 17000 in the coming weeks". Lone behold, there was a retest. At least for now, there appears to be a decent bounce from that area. The STO indicates that the bounce may still continue. For the bulls, I'd like to see it go back to the 18010 area or 50 DMA. Otherwise, any sustained break below the 200 DMA suggests the bears are here to play.
The S&P 500 closed at 2076.78 on Thursday, July 2nd 2015 versus a week ago of 2101.49 on Friday, June 26th, 2015. This was a change of 1.2% decline. The S&P experienced a huge drop toward the 200 DMA, however stopped just short of it.
Just like with the DJIA, it appears that on the SPX, the STO levels are oversold and the small bounce was overdue. Whether or not this is sustainable or there will be further follow through remains to be seen. For the bulls, you'd like to it go back to the 50 DMA of 2104.48. Evidently any break above 2130, would be good for the bulls. We should watch for any break below the 200 DMA as an indication that the bears are here to play.
The Nasdaq (COMPQ) closed at 5009.21 on Thursday, July 2nd 2015 versus 5080.5 on Friday, Mayz26th 2015. The strongest of the three indices is the COMPQ. It made a new high two weeks ago, however was quickly sold off. We are seeing signs of a breakdown of the trend. Unless the chart starts to trade above our trend line, expect more downward action.
As with the SPY and the DJIA, we are seeing the oversold indicators working themselves back away from that territory. We would expect a second test of the 50 DMA. If it doesn't break through then look out below, otherwise sustained break above would be great for the bulls.
Wells Fargo & Co. (WFC) is a company that needs no introduction. It is one of the strongest banks in the United States and has consistently outperformed its competition in almost every level. From a technical analysis standpoint, we have just retested the 50 DMA and that would've been a great entry point to go long. My stop would have been just below the 50 DMA at support of $55.5. It is not often that both the STO for the 14 day period and the 5 day period match up and when they do, typically it is a good indicator in this market to go long. Still at $56.74, this would be a good entry with a stop just below the 50 DMA. We'd expect a retest of the $58 level should the 50 DMA hold.
Disclosure: I have a long position in WFC.
Labels: Weekly Market Reviews