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Earnings helps stocks Tuesday, but Intel disappoints

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Stocks gapped open higher on Tuesday but immediately we saw some profit taking during the first hour of trading. There was another round of buying but once again things deflated into the close and the big early gains turned into a moderately higher day. The Dow, up 139 early, finished the day up 76-points.

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The market was looking for a reason to rally and I think the big number out of Netflix Monday evening may have helped as we talked about in yesterday's commentary. But after the close on Tuesday we got what may be a test for the market. After a rally off the support line and 100-day EMA on the S&P, Intel reported a disappointing earnings report and that will add some pressure to the downside, and the question is whether that will be enough to thwart yesterday's rally from continuing?


The SPY (S&P 500 / C-Fund) rallied right up to the 50-day EMA again, which is now declining, and once again pulled back so we are definitely concerned that trading below the 50-EMA is not great bull market activity. There is a small open gap near 216, where the descending resistance line is also crossing, and that could be an upside target, but with Intel disappointing and the S&P having trouble getting above the 50-day EMA, that may be a lot to ask. Let's see if the bulls have it in them. They've been relentless over the last several years so we shouldn't totally count them out yet.




The DWCF (S-fund) had a solid +0.64% day but yesterday's high hit the bottom of the old trading channel and that could hold as resistance here. Also the 50-day EMA is not too far above that. I hate to sound like a broken record but we do have to look at these charts with a little skepticism whenever they trade below the 50-day EMA for more than a few days, and that's where we are now.




The Dow Transportation Index has been the leader of late but it lagged yesterday and is testing an important longer-term rising support line again after holding earlier this month.




The EFA (I-fund) gapped up and, like the SPY, hit the 50-day EMA and stalled. The battle here between the 50 and 200-day EMA's is on.




The AGG (Bonds / F-fund) moved back into the trading channel with some authority yesterday, making a case for a double bottom here, but that won't be official until a higher high is made. Right now it is still under the 50-day EMA, which could give it some trouble.




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Thanks for reading. We'll see you back here tomorrow.

Tom Crowley


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