Though the DIA has struggled as the weakest index of late, the bulls went to work yesterday defending its 50-day average, and the technical picture improves. Big tech continues to dominate with the SPY, closing at its 34th record high of the year. The Absolute Breadth Index shows a substantial divergence from the indexes and suggests we stay focused and avoid complacency. However, stay with the bullish trend as long as this buying frenzy continues.
Asian markets traded in the red across the board overnight as a private survey shows Chinese factory activity slowed in June. European markets trade mixed but near the flatline this morning as they wait on the jobs data. U.S. futures are trying to kick off the second have of the year bullishly as we wait on Jobless Claims, PMI, ISM, & Construction Spending numbers.
Economic Calendar
Earnings Calendar
We have a light day on the earnings calendar as we begin the 3rd quarter with just 11 companies listed on the earnings calendar with several unconfirmed. Notable reports include WBA, AYI, &MKC.
News and Technicals’
As China celebrates the anniversary of its Communist regime, it will not accept sanctimonious preaching from others. FINRA said it fined Robinhood $57 million and ordered the stock trading app to pay nearly $13 million in restitution to thousands of clients. FINRA considered the widespread and significant harm suffered by customers, including millions of customers who received false or misleading information from the firm. Due to semiconductor shortages, analysts estimate automakers sold about 4.5 million vehicles in the second quarter as signs of a slowdown continue. Treasury yields are slightly higher this morning ahead of the Jobless claims, with the 10-year trading up to 1.475% and the 30-year advancing to 2.101% early this morning.
The technical picture of the indexes continues to improve, with the bulls defending the 50-day average as support on the DIA. Although the QQQ suffered a little selling, the index remains exceeding strong, as is the SPY, with the tech giants leading the way. That said, momentum continues to be a bit of a concern, with more stocks stuck slipping sideways down than those moving bullishly as the Absolute Breadth Index declines as the indexes push upward. This glaring divergence may mean nothing, but it should serve as a warning not to overtrade or become complacent if the bulls stumble or simply run out of energy. However, until that occurs, stay with the trend and ride this buying frenzy as long as it lasts. Remember, as you plan forward, we have a three-day weekend ahead, and volumes could become light, and price action could become choppy rather quickly after economic data releases as traders hit the road to celebrate the 4th.
Trade Wisely,
Doug
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