BIOTECHS PULL HEALTHCARE AND NASDAQ LOWER -- BIOGEN AND GILEAD ARE BIG CAP LOSERS -- SKYWORKS SOLUTIONS AND NETFLIX LEAD QQQ LOWER -- APPLE FALLS TO NEW LOW -- NASDAQ FAILURE THREATENS UPTRENDS IN DOW AND S&P 500
BIOTECHS PULL HEALTHCARE LOWER ... Healthcare is one of the day's weakest sectors. Chart 1 shows the Health Care SPDR (XLV) pulling back to retest its 50- and 200-day moving averages. Its relative strength line (top of chart) has starting to slip as well. Biotechs are the main drag on the XLV. Chart 2 shows the Nasdaq Biotechnology iShares (IBB) heading toward a retest of its first quarter lows. Selling in a number of large biotechs are also weighing on the Nasdaq market.
(click to view a live version of this chart)
Chart 1
(click to view a live version of this chart)
Chart 2
BIOGEN AND GILEAD ALSO HURT QQQ... Biotechs play a prominent role in the Nasdaq market. Two of the biggest are breaking down today. Chart 3 shows Biogen (BIIB) falling below its 50-day average after recently failing at its 200-day line. Chart 4 shows Gilead Sciences (GILD) in danger of falling to a new low for the year. Both stocks are heavily represented in the QQQ.
(click to view a live version of this chart)
Chart 3
(click to view a live version of this chart)
Chart 4
SKYWORKS SOLUTIONS AND NETFLIX LEAD QQQ LOWER... Selling in technology stocks are the biggest drag on the Nasdaq market. The two biggest percentage losers in the QQQ today are shown below. Chart 5 shows Skyworks Solutions (SWKS) trading at the lowest level in three months. Chart 6 shows Netflix (NFLX) headed for a test of its February low. The biggest problem for the Nasdaq, however, and the rest of the market is Apple.
(click to view a live version of this chart)
Chart 5
(click to view a live version of this chart)
Chart 6
APPLE BREAKS CHART SUPPORT... Apple is the biggest stock in the tech sector and the entire market. And it's not acting well. Chart 7 shows Apple (AAPL) falling more than 2% today to the lowest level in nearly two years. That's a big setback for it and the rest of the market.
(click to view a live version of this chart)
Chart 7
NASDAQ COMPOSITE FAILS TEST OF MOVING AVERAGE LINES ... Yesterday's message expressed concern about the Power Shares Nasdaq 100 (QQQ) remaining below its moving average lines. Chart 8 shows the Nasdaq Composite Index in a similar situation. In fact, today's selling shows the $COMPQ failing a test of its two moving average lines. That's a setback for it and the rest of the market. The inability of the Nasdaq to clear those lines has set up a dangerous "negative divergence" between it and the Dow the S&P 500. Both of those indexes have been trading above their 50-day averages. But that may not last for long. The "relative strength ratio" on top of Chart 8 divides the Nasdaq by the S&P 500. That ratio has fallen to the lowest level in more than a year. That's normally a bad sign for the S&P 500 as well as the Nasdaq.
(click to view a live version of this chart)
Chart 8
DOW AND S&P 500 THREATEN 50-DAY LINES ... The Nasdaq market is leading the rest of the market lower today. The next two charts show the Dow Industrials and the S&P 500 threatening their 50-day average. A close below that line would turn the market's short-term trend lower. Apple is the biggest loser in the Dow. Their falling MACD lines increase the odds for lower prices. That might be enough to push both market indexes back toward their 200-day lines. A cautious market also explains why money is flowing into consumer staples and utilities today.
(click to view a live version of this chart)
Chart 9
