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Tech leads as stocks close mixed

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It was a bit of a tug-o-war yesterday for the stock market and we saw the reallocation effect again, but a little different than we saw a coup of weeks ago. The Dow lost 55-points on the day and Goldman Sachs' earnings were a big part of that. The S&P 500 ticked up slightly but it was the Nasdaq that led as tech stocks are back en vogue, and Netflix earnings was the catalyst yesterday.

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The small caps lagged and bonds rallied while the dollar is falling because of slow growth, low inflation, causing yields to fall again. It could be the lack of a Healthcare bill passing in DC but regardless, stocks don't seem to care, at least not all of them.

After the close we saw IBM, and a couple of Transportation stocks, United Airlines and CRX, falling after hours, which I thought could set a negative tone for today, but the S&P and Nasdaq futures were still in positive territory so the tech momentum was still winning the war.



The SPY (S&P 500 / C-fund) tried to pullback after a early Goldman Sachs triggered sell-off, but by the close the bulls remained relentless and bought the weakness. I will keep looking at the gap as a potential downside target should a pullback ensue, and with that overhead resistance, there could be some profit taking at these highs.




The DWCPF (S-fund) pulled back slightly but closed well off the lows as the dip buyers are lurking around every corner still. There is a cluster of potential resistance at 1245 that could cause some profit taking, but will the dip buyers keep it from pulling back?




The Nasdaq 100 posted a positive outside reversal day and closed near the all-time highs. That pullback in June seems to be just a memory now. Netflix's earnings seemed to give a boost to the entire sector, and being part of the FAANG group, the buying was contagious.




The Dow Transportation Index saw a fairly moderate loss yesterday and is just above some fairly important support from a couple of rising wedge formations. It looks a little ominous, but this market has shaken off several bad set ups over the last several weeks. After the bell some disappointing earnings could shake this up a little here and potentially break that support..




The EFA (EAFE Index / I-fund) was up slightly, almost all of which was due to the continued weakness in the dollar, which is looking for support right now.




The dollar gapped down yet again as the economy seems to be slowing a bit with inflation down and the Fed backing off on interest rates for now. It may have hit support near yesterday's lows so we'll see if we get a rebound here, which could be a little drag on the I-fund in the short-term.




The AGG (bonds / F-fund) had a nice day as yields fell sharply again and bonds are nearing the recent highs. We've had that open gap above that seems to need to get filled, but can bonds continue higher once it gets filled?




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

Tom Crowley


Posted daily at www.tsptalk.com/comments.php


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S&P500 (C Fund) (delayed)

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DWCPF (S Fund) (delayed)

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EFA (I Fund) (delayed)

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BND (F Fund) (delayed)

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