A strong move in the dollar today in the face of stronger housing data helped keep a lid on the stock market moving higher. Volume on the exchanges moved higher as trades get back into the groove after Monday’s light volume session. Crude oil prices were lower as the US Dollar gained strength sending the energy sector lower. S&P 500 Energy sector led the decline losing roughly 1.3% on the session. Financials and Health Care sectors continue to stay strong. Yields were mostly higher today, but the rush out of the Energy sector helped buoy the Utility sector a bit. Not a terrible session today as we were able to hold onto the majority of Monday’s gains.
We have been noting the losers of higher yields and have yet to mention who is a big winner. Financials, especially banks have the greatest to gain from higher yields. XLF continues to push higher as big banks like GS, JPM, C, and BAC push higher. We can certainly find faults with this rally, but having financials help continue to push this market higher is not one of them. Continue to watch Healthcare and Material sectors as they continue to remain in uptrends along with this market.
The fall in crude has certainly put the pressure on the solar market. Favorites like CSIQ and FSLR are falling alongside Crude Oil. ENPH another solar name has succumbed to significant selling and it dark clouds are now covering the entire solar industry. TAN is sitting on its 10 day moving average and it will be interesting how the ETF reacts if crude oil continues to push lower.
A sign the lower end consumer is having difficulties is certainly WMT. The stock was absolutely crushed today after missing earnings. It is no big secret the lack of wage growth from the majority of the population in the United States has hurt WMT tremendously. Lower income families simply do not have the disposable income needed to consume. WMT certainly is not giving the “warm and fuzzies” when it comes to the entire US economy.
On the bright side of things we do have BABA setting in a handle pattern. Volume is certainly favoring the upside to this stock, but we will need to see price confirmation for any signal to be generated here. Keep a close eye on this stock.
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We did avoid a day of distribution today with buyers supporting the market at the close. It was nice to see the market avoid distribution. This market still lacks a powerful follow-through session. While we do not need one it would be a welcomed sign for this market to really thrust higher. The vital element is we continue to manage our risk and follow our price signals. We are positioned for this market to continue higher and have our exit strategy in case the market turns on us. The real question is are you prepared?
