Friday, July 13, 2018

Stocks Gain, Dow Approaching Resistance Around 25,000

Stocks ramped higher on Thursday, taking back all of the losses from the prior day and advancing to its highest level since June 18. What lay ahead for the industrials is a trading areas that has proven to offer some resistance around and above 25,000.

In mid-June, at the tail end of a four-day rally, the Dow topped out at 25,322.31 (June 11), then stalled, sending the index tumbling more than 1200 points to 24,117.59 by June 27.

Will the pattern repeat? Obviously, it's too early to tell, but charts are suggesting that there will be some selling in this area. What may prompt any trading action are the emerging second quarter earnings reports, especially those on Friday from major banks.

Prior to Friday's open, the nation's largest bank by assets ($2.6 trillion), JP Morgan Chase (JPM) reported adjusted revenue of $28.39 billion, beating estimates of $27.34 billion and EPS of $2.29, also topping expectations of $2.2. Net income rose 18%, to $8.3 billion.

Citigroup (C) reported higher EPS, but missed on the revenue line. Shares were selling off slightly in pre-market trading.

Wells-Fargo (WFC) was down sharply prior to the opening bell after reporting a decline in net income applicable to common stock, which dipped to $4.79 billion, or 98 cents per share, in the quarter ended June 30, from $5.45 billion, or $1.08 per share a year ago. Analysts expected $1.12 per share.

Mixed results from the financial sector come as no surprise. Squeezed margins from the flattening yield curve has put pressure on bank stocks for some months. The financial sector has been one of the weakest through the second quarter and the pressure does not appear to be relenting any time soon.

Friday should be full of fireworks.

Dow Jones Industrial Average July Scorecard:

Date Close Gain/Loss Cum. G/L
7/2/18 24,307.18 +35.77 +35.77
7/3/18 24,174.82 -132.36 -96.59
7/5/18 24,345.44 +181.92 +85.33
7/6/18 24,456.48 +99.74 +185.07
7/9/18 24,776.59 +320.11 +505.18
7/10/18 24,919.66 +143.07 +648.25
7/11/18 24,700.45 -219.21 +429.04
7/12/18 24,924.89 +224.44 +653.48

At the Close, Thursday, July 12, 2018:
Dow Jones Industrial Average: 24,924.89, +224.44 (+0.91%)
NASDAQ: 7,823.92, +107.30 (+1.39%)
S&P 500: 2,798.29, +24.27 (+0.87%)
NYSE Composite: 12,761.46, +79.87 (+0.63%)

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