Despite the fact that the S&P 500 hit a record high today, market internals painted a less rosy picture. Both the positive and negative VWAPS, an indication of buying and selling pressure, were relatively equal. Some of the heightened selling appears to be profit-taking, especially in those issues that have experienced out-sized gains such as Chipotle (CMG) and Rex American Resources (REX). Over the past year, the stock of Chipotle has appreciated 75% while that of Rex has notched an impressive gain of 230%. The other indication that the market may be nearing a short-term top is the fact that the market-leading Dow Transports (DTX) was the only index not to close the day in the green. It would be no surprise if the market sold-off on tomorrow's open followed by a tepid to down day as traders make an early break for the beach.
Market Highlights: Banks on a roll/A growth & dividend tech stock
The good news in today's market were that both the Financial and the Tech etfs, XLF and XLK, broke out to new highs. Leading the financials were the insurers and the banks, especially foreign regional banks which, if considered purely on a P/E basis, are relatively undervalued compared to the overall market. (P/E of the S&P 500 currently stands at 19.76). Today's leaders in this space are the following: Banco Bradesco (BBD, $16.86; P/E = 6), Banco Latinoamericano (BLX, $32.84; P/E = 14), and Canadian Imperial Bank (CDN, $96.07; P/E = 13).
On the tech front, there is one etf that broke out to a new high today that not only combines the appreciation of tech stocks but throws in a dividend as well--the First Trust Nasdaq Tech Dividend Index Fund (TDIV, $27.60). The fund's major holdings include all of the tech giants--Intel, Apple, IBM, Microsoft, Hewlett-Packard, Cisco, and Oracle are among the fund's top ten holdings. Considering that this fund is composed of tech names, a yield of 2.46% is not too shabby. For you covered call players, there are options but they are thinly traded. If you're looking for long-term growth and income, this is one fund worth keeping on your watch list to buy on dips.
Market Lowlights: Apparel retailer Stage Stores (SSI, $17.03) gapped below $18 support on heavy volume after the company's second quarter report fell below analysts' estimates. Citing decreased foot-traffic as part of the problem, management lowered full year guidance on both the top and bottom lines. Technically, the stock has support at $16. Should the share price violate that level, it could easily drop down to its next level of support at $14.
