U.S. indices hit a lot of "round numbers" this morning, the Dow Jones Industrial Average crossed 16,000 and the S&P 500 1,800. We noted late last week that these round numbers sometimes mark near term tops but it is not necessarily the case. They could also mark a bit of a resting point and that is what happened today. Activist investor Carl Icahn spoke at a conference today and said he is "very cautious" on the stock market, saying he could see a "big drop" because earnings at many companies are fueled more by low borrowing costs rather than the strength of management. This caused a round of selling in the afternoon but really just took some froth out of the market. The S&P 500 fell 0.37% and the NASDAQ 0.93%. One item to note overseas is China relaxing its "one child" policy - that pushed the Shanghai index up nearly 3%.
At the index level today's action was the 2nd "bearish outside" reversal in as many weeks. Last time it was only in the S&P 500 (yellow shade below); this time it was in both the NASDAQ and S&P 500. It didn't matter at all last time, so in a world of money printing with $85B a month headed in all directions, one has to be cautious about becoming prematurely bearish. The last outside reversal day was completely reversed in a session or two.
Boeing (BA) shares rose Monday after the aircraft maker said it sold more than $95 billion of its new 777X at the Dubai air show. Boeing said it was a record launch for a new aircraft and was far more than analysts had been forecasting.
Mega bank JPMorgan (JPM) jumped on news of a $5B mortgage security settlement. While the amount is large, removing uncertainty is a positive.
On the negative side the hot momentum stocks from earlier this year are not really acting well. Tesla (TSLA) is a great example of what happens when a momentum stock stops working. So many "investors" in this stock are not truly investors - they are traders...so once they leave you have action like this.
Facebook (FB) is not quite as extreme but you can see the 50 day moving average is now acting as resistance.
Yelp (YELP) likewise had a rough session
As did recent IPO Twitter (TWTR)
