New Highs New Lows NYHL – Still Bullish
The New York Stock Exchange NYHL, a measure of new 52-week hIghs compared to new 52-week lows, is pointing to a persistent tailwind for equities. This indicator is bullish as a major earnings week unfolds. Monday saw 34 fresh new highs on the NYSE a gain of 79% compared to Friday.
New Highs and GDP Report on Friday
GDP will be announced on Friday. Most economists are projecting a number near 4%.
This report could fuel additional new highs. The strength in NYHL helped push NYSE (NYA) Composite above a trend line extending back to February pivot highs. A robust GDP report is anticipated, so our next targets are 12,900 (pivot high) and 13,010 (pivot high).
Alphabet’s weighting in the major indices pushed most of the indices higher on Monday. By the close, Nasdaq finished lower for the day as tech faded.
INTC, AMZN and other big tech stocks in the FAANNG universe report second-quarter earnings. Facebook reports after the closing bell tonight.
New Highs – Financials
Banks are performing lately, despite some resistance levels overhead. BAC tagged the 31.00 zone and reversed. JPM reversed at the 114.00 zone as well, previous resistance is still pretty strong. All things considered, the cycle is bullish, with room to run before reaching extremes.
Let your winners run in the financial and industrial sectors. Cut your losses in lagging sectors and reduce position size.
XLE – Cycle is Weak
We are on the fence with energy stocks, as the sector saw some activity on Monday. That said, this is one group that we are actively reducing the number of open positions. We’ll sweep that money to cash or funnel some into winning positions.
This was our comment yesterday, before the opening bell.
“The energy is sector shows support between 73.00 and 74.00, so look for a bounce as a range could hammer out between these levels (73.00 and 78.00).”
As a result of Monday’s strength, we drew in a trendline along the 74.00 pivot. Look for a follow-through day.
XLP and XLU also look weak. Trim positions in this group.
Finally, keep an eye on the watch list for the week, especially in the financial group. BAC and SQ are working. Healthcare, retail, and technology round out the stocks on the list. All should do well this week.
Futures are lower in the morning session as Boeing sold off on good earnings. Bitcoin is flat at 8,100.
Monday morning we discussed persistent strength in new highs. Keep an eye on breakouts.
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