5 July 2016 – Stocks tumbled, bonds strengthened

The indices encountered selling pressure throughout the day and bonds continued to perform well. Defensive and interest rate sensitive sectors such as Utilities and Consumer Staples outperformed on the day. Crude oil suffered a big drop where gold and silver continue to break to new high.

Dow Transportation gapped down on market open and had a sharp sell-off in the first half hour after market open. The range traded for the rest of the day and rallied in the last hour to close with a bearish marubozu candle. Momentum remains downward. Daily volumetric buying pressure is at 76.1%.

Dow Industrial gapped down on market open and continued trading downward till early afternoon. Buyers came in and closed with a hammer candle above its 8 EMA and 21 EMA. Momentum remains upward. Short term volumetric buying pressure is at 52.5%. The index is in a monthly Squeeze.

Russell 2000 sold off sharply on market open till early afternoon. It recovered slightly in afternoon trading and closed with a bearish marubozu candle on its 50 SMA. Momentum remains upward. Volumetric buying pressure is at 63.1%.

Nasdaq 100 gapped down on market open and range trade throughout most of the day. It closed with a hammer candle below its 200 SMA but above its 50 SMA, 21 EMA and 8 EMA. Momentum remains upward. Volumetric buying pressure is at 63.2%. The index is in a monthly Squeeze.

S&P 500 gapped down on market open and continued selling off till early afternoon. It rallied in the last hour and closed with a hammer candle above its moving averages. Momentum remains upward. Volumetric buying pressure is at 70.6%. The index is in a monthly Squeeze.

Metals and Commodities
Oil (/CL) futures traded down to $46.27 per barrel. Gold (/GC) futures made new high and is trading at $1370.4 per ounce. Silver (/SI) futures continues its upward trajectory and is trading at 20.360 per ounce.

Agriculture (DBA) ETF closed at 21.84. Commodities (DBC) ETF closed at 15.10.

Bonds
High Yield bond ETF (HYG) is up at 83.99. Bonds ETF (TLT) closed at 142.33.

Currencies
The dollar index is at 96.455. EUR/USD is trading at 1.10441. USD/JPY is at 100.769.

Relative Strength – Sectors
On a monthly lookback, the ETFs outperforming the S&P 500 are XLU, XLV, XLI, XLY and XLF respectively.

On a 3-month lookback, the relative strength order are XLU, XLE, XLP, XLV, XLI, XLY and XLF are outperforming the S&P 500.

Market Internals
Vix closed down at 15.58. Vix futures is at 17.75. Skew is elevated at 125.35. Market sentiment is bullish. Market breadth is sloping upward. Volumetric accumulation/distribution is sloping upward.

The Week Ahead
The market remains bullish with profit taking activities after the post-Brexit rally. Market internals continue to look strong. Bonds, Gold and Silver continue to outperform. The prognosis is that the market is looking for new catalyst to propel it higher but investors are taking precaution in the meantime.

To YOUR wealth!