NEW YORK (AP) -- Stocks slipped Thursday as investors decided to lock in profits at the end of a historically strong month.
Indexes rose sharply just after the market opened following news that unemployment claims dropped and manufacturing activity in the Chicago area rose. But since the initial burst of buying, traders decided it was a good time to pocket profits.
The Dow Jones industrial average fell about 22 points in afternoon trading. Even with the pullback Thursday, the Dow has risen 8 percent this month, putting it in line for its best September since 1939.
It’s month end and quarter end, and the mutual fund complex has probably been adding to positions into month end for window dressing to reflect they are in what’s working. It will be interesting to see what happens going forward. Have we topped?
$SPX: The index failed to hang onto hefty gains. I’ve been calling for a top of some kind into the end of Sept. I also said yesterday that one more little splash higher fits very well to finish this potential ABC pattern up. Today's price and bearish candlestick fits very well for some kind of top.
MACD beginning to roll over with Bollinger Bands pinching with price stalling below the upper band. That all feels like a tired market. The only thing missing is follow through to the downside. What I’m looking at from here is what does price do if it tests support below which consists of price support, 50 and 200 day MAs, and a couple of gaps. All of that said, “We are still in No Man’s land for trading.”
$SPX 60 Minute: Here's the 60 minute chart with the ABC wave count and the pitchfork. Wave C may have finished today right at the middle line. The first sign of confirmation is for price to trade below the red line @ $SPX 1,122. That will also over lap wave A, which adds to the bearish view.
IBM: Stock gave a little back today. While it looks tired and due for at least a little back test of what is now support. A little more upward momentum is still viable.
JNK: It’s still grinding higher testing the upper Bollinger Band. Nothing bearish in price yet, even though we have divergences.
$COMPQ: Small pull back at resistance. MACD beginning to roll over.
XLF: Hanging tough at the 50 day MA. If we get below that, we have a large gap that could easily get filled. MACD turning down.
$TRAN: Put in a bearish little candlestick. Looks tired and any follow through to the downside could open the door for increased selling pressure.
$VIX: Testing the upper trend line. Couldn’t hold most of the day's gain. Break out in either direction has to be coming soon.
My Watch List:
SRS: Tried to make a little move but stalled. Bollinger Bands are very tight and the MACD is trying to turn up. It looks like a little wave 1 and 2, but it needs to make a move and soon. I’d like to see above $22.
UNP: MACD is trying to roll over but there’s room for a little more upside. Divergences on both the RSI and MACD. Below $77-78 and the bearish view gains momentum.
NEM: MACD is beginning to roll over while price looks tired. It could easily splash a little higher, but I still think the structure suggests the bigger move is down.
BXP: MACD is clearly heading lower. Price is stuck at the 50 day MA and lower Bollinger Band. Next support is a gap and the price support. I expect the 50 day MA to fail as support.
UNH: It’s still the fade trade. Price failed to hang onto gains and it looks tired as well. MACD is trying to roll over.
From My Trading Desk: We took a half short position on UNP today. It's a touch aggressive but it looks like it's ready to roll. Unless the market is off hard tomorrow, I doubt I will do anything going into the weekend. As much as it looks like we have finished ABC up with a move lower pending, the MACD on the weekly and monthly time frames are still bullish. Therefore, we should want to see bearish price structure before increasing bearish positions in the market. Just a little risk management for the time being.
Happy Trading.
J.D. Rosendahl, Rosey