The Market’s Advance Continues; Breadth Divergences Across Time Frames Call for a More Selective Approach

The SPDR S&P Oil & Gas Exploration & Production ETF (XOP) has a Bearish Chaikin Power Gauge ETF rating and has been lagging the SPY for more than a year. The OB / OS Indicator is stalling before reaching an overbought condition and Chaikin Money Flow is extremely bearish. XOP is below the declining long-term trend line and has a bearish Power Bar Ratio at 5 to 18.    

Stock of the Day – Chevron Corp.  (CVX) – Very Bearish Rating

Chevron Corp (CVX) has a Very Bearish Chaikin Power Gauge rating and has been lagging the SPY consistently since October. The stock is overbought based on our indicator and Chaikin Money Flow is bearish. CVX is below the declining long-term trend line and triggered an Overbought Sell signal today. Below $117.35, the stock is likely to trade lower. 

The Chaikin Power Gauge Rating for CVX is Very Bearish due to very weak earnings performance, poor financial metrics and negative expert activity. CVX’s earnings performance is very weak as a result of poor EPS growth over the past 3-5 years and worse than expected earnings in recent quarters.

Pre-Market Movers

Advancers: ADT (9%), TRIP (4%), AMAT (2%), REGN (1%), ANTM (1%)

Decliners: NUS (15%), NTAP (11%), PS (9%), COTY (6%), CTL (5%)

Market Commentary/Looking Ahead

US equities ended Wednesday at another record high. Energy, Technology and  Consumer Discretionary were the leaders. Consumer Staples was the only sector to close lower on the day. Treasuries were weaker with the curve steepening. The dollar was stronger vs both the yen and the euro. Gold finished the day flat. WTI Crude settled up 2.5%.

The iShares Russell 2000 ETF (IWM) has a Bullish Chaikin Power Gauge rating but continues to lag the SPY. The fund is now overbought as it consolidates below the January highs and Chaikin Money Flow has become mixed. IWM is above the rising long-term trend line and has a bullish Power Bar Ratio at 520 to 254.   

S&P futures are down 0.7% as coronavirus fears resurface. Asian markets were mostly lower overnight with weakness led by mainland China. European markets are declining as well. Treasuries are stronger across the curve. The dollar is weaker vs yen but little changed vs the euro. Gold is up 0.4%. WTI Crude is down 0.4% after gaining 2.5% on Wednesday.

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