Oil Divergence Gives Clear Signal

WEEKLY MARKET ANALYSIS

Stocks opened modestly higher but the advance reversed and accelerated during the day into the close. The Dow Jones Industrial Average ETF DIA was down 2 points on the day and closed at 265. For the S&P 500, there is support near 2900 and 2870. Resistance levels are currently at 2962 and 2992.

GLOBAL ASSETS UPDATE

TWELVE SECTOR ANALYSIS

VOLATILITY UPDATE

On Wall Street, 11 of the 12 major market sectors are seeing red today. The biggest losers are Technology (XLK), Consumer Discretionary (XLY), and Software (XSW). The strongest sector today has been Pharmaceuticals (XPH) which has gone up 0.5%.

The CBOE Volatility Index (VIX) is up $0.85 going from $15.43 to $16.28 today. Both Call and Put volumes are below average today. The ratio of puts to calls for the current at-the-money strike of $16 is above average which means that traders are favoring Puts over Calls currently.

MARKET HEAT

A NASDAQ stock with unusually high volume today is Brighthouse Financial Inc (BHF). No AMEX names had significant interest, and on the NYSE Allergan plc (AGN) has had unusual volume.

The biggest mover out of other high-volume stocks is Allergan plc (AGN) which has moved up over 25% recently on volume of over 33 million shares. The chart below shows the performance of AGN over the last year. Allergan plc is a specialty pharmaceutical company.

DARWIN ALLERGAN PLC FORECAST

The performance of Allergan plc (AGN) will be worth watching in the near term for a number of reasons. The forecast for the coming week on AGN is for the price to go down. The correlation of AGN to the S&P 500 recently has been 0.2 which is a weak positive correlation. Key levels to watch for AGN are downside support at both the $134 and $150 price points.

Trade smart,

Paul "Bulldog" Hudson, Chief Investment Officer
Darwin Investing Network