Markets finished near session lows Thursday, with the Nasdaq recording the biggest reversal turning an early gain of 4% into a loss of .5%. For the week heading into Friday it is lower by 1.2%, not terrible considering the prior weeks 4.25% advance. However the weekly chart maybe showing a bearish dark cloud cover candle depending on tomorrows close. The S&P 500 has declined 1.1% thus far this week and is sitting back at the round 2100 figure which doubles as 50 day SMA support. The weakest sectors today were important indicators of the true health of the economy with the industrials and basic materials slumping. Two names that highlighted that narrative today following earnings were DOW and CAT. DOW is on a 5 day losing streak and a devilish 6.66% for the week after a bearish reversal last week. It undercut its 200 day SMA without even blinking Thursday. CAT is on a 7 day losing streak and more than 30% off recent 52 week highs. Looking left on the CAT chart shows how this could be the start of a big down move as the round 80 figure was important dating back to the summer of ’12, again in April ’13 and January through April this year. FDX looks concerning as well. This name has long been considered a bellwether for the economy and is now down 4% YTD. Below is the chart and how it appeared in our Wednesday 7/8 Game Plan (peer UPS is lower by 14% in 2015). The last line of defense for a name is usually the 200 day SMA if that is not defended. It is now lower 2% for the week and depending on tomorrows close would by down 5 of the last 6. UNP could not deliver the goods this morning, as rivals KSU and CNI did earlier in the week regarding earnings. UNP fell almost 6% Thursday and with the Dow Jones dropping 2% the last 3 sessions and resting uncomfortably along its 200 day SMA, Charles Dow must be rolling in his grave.
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