Investors returned from the three day weekend to a bout of selling. While the major indexes were down materially – the S&P 500 0.45% and the NASDAQ 0.87%, the variation today between the DJIA (down fractionally) versus the Russell 2000, full of small cap stocks, (down 1.34%) told the story of the past few weeks. Unlike the beginning to middle part of this rally – mid November to mid February, the last six weeks have been about the stodgy, conservative stocks. Today’s decline was mostly at the hands of a poor ISM Manufacturing report, which was down sharply month over month with a reading of 51.2 versus last month’s 54.2 While anything over 50 is still expansionary this is quite a reduction.
Technically what we had in the S&P 500 was a breakout to new highs last Thursday, immediately met with a bout of selling; not a fun situation. While the index showed moderate losses a lot of individual names in the index were down 2-3%+ while the same staples, healthcare type of stocks helped the index hold up. For now the S&P 500 seems content to go back and forth between this small support line (in blue) and the bottom of the accelerated channel it had been traveling most of the rally.
The NASDAQ was more representative of the day it was in terms of losses.
Here is the chart of the Russell 2000 – it has stalled in this 950ish area.
Strangely, the NYMO Oscillator is already in a somewhat oversold state – just a day after new highs on the S&P 500. The problem is breadth, fewer stocks are carrying the load and even as we saw new highs this index got nowhere near overbought.
Apple was horrid today, down 3%. You can see on the long term chart it had its one moment of glory in the past few months, breaking over the long term resistance line for two whole sessions, before rolling right back over.
On the positive side here are two charts we found with positive technicals – both are in “bull flags”, and withstood today’s selling; one is an energy name and one is in retail. Both outperformed their respective sectors on a down day and as long as they hold the bottom part of their flag, should be poised to continue this performance during future positive days. Finding stocks doing well in down tapes is a good way to find outperformers.
Last, Tesla Motors (TSLA) was the star of the day as the stock jumped on monster volume with an announcement of profitability, and model S sales that exceeded target.
“As customers who note their Model S serial number this weekend will realize, vehicle deliveries (sales) exceeded 4,750 units vs. the 4,500 unit prior outlook (from February),” Tesla said in its sales announcement late Sunday. “As a result, Tesla is amending its Q1 guidance to full profitability, both GAAP and non-GAAP.”
Original post: STTG Market Recap Apr 1, 2013
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