MMM AND UPS WEIGH INDUSTRIALS DOWN -- AMERICAN EXPRESS BREAKS OUT TO NEW RECORD -- BANK INDEX TRIES TO CLEAR ITS 200-DAY LINE -- S&P 500 CONTINUES TO CHALLENGE ITS 2018 HIGH
INDUSTRIAL SPDR GAPS LOWER ... In a mixed market day, industrials are the weakest sector. Chart 1 shows the Industrial Sector SPDR (XLI) gapping lower today. That hasn't caused any serious chart damage with the XLI still trading well above its blue 50-day average. It is worth noting, however, that the XLI is in the process of testing its September high near 79. That would be a logical spot for some profit-taking to appear. Most of today's XLI selling is coming from two stocks. Chart 2 shows 3M (MMM) gapping more than 12% lower today in very heavy trading. Today's drop puts that stock back below its 200-day average. Chart 3 shows United Parcel Service (UPS) gapping more than 7% lower today in heavy trading. UPS is also back below its 200-day line. UPS is also leading a decline in transportation stocks. The drop in MMM is holding the Dow Industrials down today; but is being offset somewhat by gains in Microsoft, Boeing, Disney, and American Express.
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Chart 1
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Chart 2
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Chart 3
AMERICAN EXPRESS HELPS LEAD FINANCIALS HIGHER ... Chart 4 shows American Express (AXP) breaking through previous peaks near 113 to reach a new record. AXP is one of today's leaders in the Dow and a stronger financial sector. Its relative strength ratio (top box) also shows the stock starting to show some market leadership versus the S&P 500. Banks may also be joining the XLF rally. Chart 5 shows the KBW Bank Index ($BKX) very close to clearing its 200-day line. An upside breakout there would give an added boost to the Financial SPDR (XLF) which has just reached a new six-month high
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Chart 4
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Chart 5
S&P 500 CONTINUES TO TEST LAST YEAR'S HIGH... The 2019 stock market rally has reached another important technical test. Chart 6 shows the S&P 500 challenging last September's intra-day record near 2940. Normally, that would be a logical spot for some profit-taking to emerge. So far, however, selling has been relatively mild. Chart 6 shows the SPX still trading above its 20-day moving average (green line); and all moving average trends remain positive. The SPX would have to drop below the green line to issue a short-term warning. A decisive close in record territory would be another positive sign for the market uptrend. In today's trading, six sectors are trading higher led by communications, healthcare, financials, utilities and technology. Within a weaker semiconductor group, a 5% gain in Lam Research (LCRX) is being more than offset by a -16% drop In Xilinx (XLNX). Industrials, materials, staples, and cyclicals are also in the red. Energy and REITs are basically flat on the day. In other markets, another dollar high is putting downside pressure on commodity prices. Copper stocks are especially weak today.
