Markets finished off session lows Tuesday but still felt some pain. It was the Nasdaq that was hit the hardest today as the index fell .9% compared to a .6% drop for the S&P 500 (the Nasdaq at its worst was off 1.4%). More concerning from a risk on perspective was the Russell 2000 losing 1.4%, and perhaps that was rational as the small cap benchmark is seen as a pure play on the US and we know how soft GDP figures have been. And perhaps oil has been signaling that all along as it is often viewed asa good read on the economy. WTI CLOSED beneath its 200 day SMA for the second straight day and volume has been enormous. Potentially a good tell was the action in some of the individual names in the group, many of which shrugged off the commodity and finished higher. The benefit of the doubt can be given to the sector as long as the general PXD remains above an upward sloping 50 day SMA in my opinion. Today it recorded a spinning top candle, but is finished above its 50 day for a third consecutive session. One or two more days ending the day above should have bears proceeding cautiously. Energy happened to be the only major S&P sector to finish in the green today, and it did so in a “energetic” fashion as the XLE rose almost 1% Tuesday. That being said its recovery today was muted by the fact that the ETF lost 3.3% Monday in the largest daily volume since 3/7. Interestingly even with crude’s woes accelerating, retail names were hit hard today. Below is the chart of laggard RL and how it was presented in our Friday 7/22 Game Plan. Laggards should be the first names one should look to short.
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