HEALTHCARE AND TECHS LEAD MARKET LOWER -- AMAZON.COM AND MERCK ARE MAIN REASONS
AMAZON FORMS POSSIBLE ISLAND TOP... Big losses in Amazon.com and Merck are leading a market correction in morning trading. AMZN has gapped down almost four points in active trading. Combined with an upside gap formed two weeks ago, a potential "island reversal" has formed on the daily chart. While that may not have long-term significance, it does suggest that short-term top has formed.
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MERCK BREAKS CHART SUPPORT... Merck is another big volume loser today. The big drug stock has fallen under its March low to reach a new 52-week low. That's a bad combination. The weekly bars in Chart 3 show next potential support near 42. Drug stocks are very weak today as a result of the fall in Merck. Big losses in Amgen and Tenet Healthcare have made healthcare the day's biggest group loser.
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HEALTCH CARE LOOKS SICK... The Health Care Select Sector SPDR is down almost 2% today and is the day's weakest group. This isn't something new. The chart shows a weak group since the summer both on an absolute and a relative basis. The XLV has been triangulating for two months and is threatening to break its 200-day average. That wouldn't be good.
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QQQS AND THE SPDRS CORRECTING... The daily charts of the Nasdaq 100 Shares (QQQ) and the S&P 500 SPDRs (SPY) are trading lower this morning. As is usually the case, the first line of the support is the (dashed) 20-day moving average. Any close beneath that line would signal a further drop to the 50-day moving average. With the stock market correcting today, bonds are bouncing. The dollar is under pressure once again, and gold prices are bouncing another $4.00 on top of yesterday's $7.00 gain.
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