Asian stocks took a further beating today as the Hang Seng plunged another 2% today. Today is not only the last day of the week but also the last day of the month, and this means in Europe and in the US we may see some rebalancing of portfolios and that is likely to bring higher volatility. Overall, the US indices are on track to post some solid gains for this month and the only area of weakness is the Asian indices which many may consider as an opportunity.
In terms of stocks, Amazon will be very much in focus after reporting their strong quarter, however there were some disappointing areas as well such as revenue. The stock sank nearly 7% yesterday after it missed the revenue estimates for the first time in nearly three years.
Dow Jones and S&P 500: Market Breadth
The Dow Jones’ market breadth gained some momentum back yesterday. 73% of the Dow Jones stocks traded above their 200-day moving average.
The S&P 500 stock breadth also displayed strength yesterday. 75% of the shares traded above their 200-day moving average.
Dow Jones Futures Today
The Dow Jones futures are trading lower today. In terms of economic data, investors will be looking at the core PCE index and revised consumer sentiment readings which are due later in the day. The forecast for the consumer sentiment is 80.8 and for the Core PCE, it is 0.6%.
The Dow Jones industrial futures are set to post weekly losses but monthly gains today. The price is still very much close to its all-time high, which confirms that bulls aren’t giving up any time soon. However, traders may want to adopt a cautious approach as the price is trading well away from their 50, 100 and 200-day SMAs on the daily time frame. Having said that, the RSI-the relative strength index, has entered the area of overbought and this means that the rally may continue for the Dow Jones index. Finally, we also need to be mindful of a bearish pattern, a double top, which is formed on the daily time frame.
The near term support is at 34,441, while the resistance is at 35,059.
Stock Market Rally
The S&P 500 stock index closed higher yesterday; the index increased by 0.42%. The material sector led the index higher and 9 out of 11 sectors closed higher.
The Dow index advanced yesterday; the Dow stocks moved the index higher by 0.44%. 24 shares advanced, while 5 shares closed lower.
The NASDAQ composite, a tech-savvy index, closed higher by 0.11% yesterday.
S&P 500 Leaders and Laggards: Align Technologies and Citrix Systems
Align Technologies stock contributed the biggest gain, soaring 8.86%. Citrix systems stock was the largest drag; it fell by 13.57%. The S&P 500 stock index is up 2.8% so far this month.
Dow Jones Leaders and Laggards: Travelers and Merck
Traveler’s comp provided the biggest help for the Dow Jones; it advanced by 1.403%, while Merck & Co was the largest decliner, it fell by 1.787%.