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MARKET COMMENTARY - Monday, February 02, 2015
Overall, each of the major averages fell by at least -2.6% this week and finished lower for a second month. The Dow posted a monthly loss of -3.7%, the S&P 500 fell -3.1% and the NASDAQ declined -2.1%. Behind Friday's large losses the volume totals were reported higher than the prior session total on the NYSE and on the Nasdaq exchange, a clear sign of more worrisome distributional pressure. Breadth was solidly negative as decliners led advancers by more than a 2-1 margin on the NYSE and more than 3-1 on the Nasdaq exchange. Leadership again contracted as there were only 13 high-ranked companies from the CANSLIM.net Leaders List that made new 52-week highs and appeared on the CANSLIM.net BreakOuts Page, half the prior session total of 26 stocks. New 52-week highs outnumbered new 52-week lows on the NYSE but new lows outnumbered new highs on the Nasdaq exchange. There were gains for only 2 of the 11 high-ranked companies currently on the Featured Stocks Page.
Deterioration in the broader market was a bad sign concerning the M criteria after last week's progress was quickly erased and followed by more worrisome damage. Members were cautioned - "The bullish action is not a guarantee that the major averages will reach new highs and continue into new high territory. Keep in mind that new buying efforts should only be made in stocks meeting all of the fundamental and technical guidelines the fact-based investment system."
PICTURED: The S&P 500 Index fell 26 points to 1,994, slumping toward prior lows and its 200-day moving average (DMA) line defining important near-term support. Friday's loss on higher volume was a clear sign of institutional selling termed "distribution".
Stocks ended the month on a down note. The Dow lost 251 points to 17,164. The NASDAQ Composite declined 48 points to 4,635.
The major averages retreated after a report showed the U.S. economy expanded at a slower than expected pace. GDP grew at a 2.6% annualized rate in the fourth quarter, missing analyst estimates for a 3% gain and following a 5% advance in the third quarter. Other data was positive. Manufacturing in the Chicago area expanded at a faster pace than anticipated in January and a separate report revealed consumer confidence reached an 11-year high.
Nine of the 10 sectors in the S&P 500 declined. Utilities and consumer staples were the worst performing groups. Southern Co (SO -3.92%) and Wal-Mart (WMT -3.12%) both slumped. Occidental Petroleum (OXY +2.16%) rose while energy-linked stocks advanced as WTI crude jumped +6.7% to $47.52 per barrel. On the earnings front, Amazon.com (AMZN +13.71%) rallied after posting a better-than-expected profit tally.
Treasuries staged a rally. The 10-year note gained 30/32 to yield a 20-month low of 1.65%.
The Featured Stocks Page shows recent notes and Headline Links directing members to detailed analysis with data-packed graphs annotated by a Certified expert. See the Premium Member Homepage for archives to all prior pay reports published.
Commodity-linked groups were the standout gainers on Friday as the Gold & Silver Index ($XAU +2.94%) and Oil Services Index ($OSX +2.91%) both rose nearly +3% and the Integrated Oil Index ($XOI +0.70%) posted a smaller gain. The Retail Index ($RLX +0.21%) edged higher. Meanwhile, the Semiconductor Index ($SOX -2.02%) and Networking Index ($NWX -1.94%) led the tech sector's retreat while the Biotechnology Index ($BTK -0.09%) finished flat. The Broker/Dealer Index ($XBD -1.78%) and Bank Index ($BKX -1.42%) also both suffered losses and were a negative influence on the major averages.
Charts courtesy www.stockcharts.com
PICTURED: The Broker/Dealer Index ($XBD -1.78%) is consolidating near its 200-day moving average (DMA) line which recently acted as support.