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Midweek Market Trend for July 11, 2018

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Over the last week, the technical condition of the market improved somewhat, with the S&P 500 (SPX) regaining its 50-day simple moving average. SPX is now testing the top of its multi-month trading range at around 2800 (Figure 1).

Figure 1: 

Source: StreetSmart Edge®

So what might cause an upside breakout?  Perhaps either a robust earnings season or further progress on trade issues. Earnings season starts on Friday, with several major banks reporting and begins in earnest on July 16th.  One technical positive for the SPX is that the widely followed McLellan Oscillator flashed a buy signal at the end of last week and is still rising (Figure 2).

Figure 2: 

Source: ©Stockcharts.com

The NASDAQ composite (COMPX) held its 50-day moving average in its last pullback and is now approaching its all-time high. The NASDAQ advance/decline line made a new high yesterday (July 9th) which is another technical positive (Figure 3).

Figure 3: 

Source: ©Stockcharts.com

Turing to sector action, energy has just broken out of a triangle formation and looks like it wants to test its old high (Figure 4).

Figure 4: 

Source: StreetSmart Edge®

Healthcare has a broken out as well (Figure 5). The move is being powered by biotech (Figure 6) and healthcare equipment which has just made an all-time high (Figure 7).

Figure 5:

Source: StreetSmart Edge®

 

Figure 6:

Source: StreetSmart Edge

Figure 7:

Source: StreetSmart Edge®

Financials, though, are still mired in a trading range (Figure 8). Within the sector, the smaller, regional banks (Figure 9) are trading better than their larger counterparts (Figure 10). It will be interesting to see if this changes on Friday after earnings come out on JP Morgan, Citicorp and PNC.

Figure 8: 

Source: StreetSmart Edge®

Figure 9:

Source: StreetSmart Edge®

Figure 10:

Source: StreetSmart Edge®

Finally look to see if the industrial sector can regain its 200-day moving average and hold it (Figure 11). A failure there would be a bit of a headwind on the overall market.

Figure 11: 

Source: StreetSmart Edge®

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