The Best is Yet to Come in This Market

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The major indices fell Wednesday on a drop in oil prices, concern over Federal Reserve Chair Janet Yellen’s expected presentation on Friday, and an attack on the drug industry’s pricing by Hillary Clinton.

The Democratic presidential candidate labeled Mylan NV’s (NASDAQ:MYL) price increase for the its lifesaving EpiPen injection device “outrageous,” sending the drugmaker down 5.4%. The wholesale price has increased almost 500% over the past seven years. Mylan led the biotech sector lower, with the iShares NASDAQ Biotechnology Index (ETF) (NASDAQ:IBB) off 3.4%.

Oil plunged 2.8% to $46.77 a barrel after a report from the Energy Information Administration said stockpiles of crude oil and refined products increased by 6.6 million last week to a record 1.4 billion barrels.

Gold lost 1.2% at $1,324.40 an ounce, dragging miners down with it. Notable decliners included Newmont Mining Corp (NYSE:NEM), down 7.7%, and Freeport-McMoRan Inc (NYSE:FCX), off 7.5%.

At Wednesday’s close, the Dow Jones Industrial Average fell 66 points to 18,481, the S&P 500 was off 11 points at 2,175, the Nasdaq lost 42 points at 5,218, and the Russell 2000 was down 11 points at 1,237.

The NYSE Composite’s primary exchange traded 756 million shares with total volume of 3.1 billion. The Nasdaq crossed 1.7 billion shares. On the Big Board, decliners outpaced advancers by 2.3-to-1, and on the Nasdaq, decliners led by 2-to-1. Block trades on the NYSE increased to 4,854 from 4,768 on Tuesday.

S&P 500 Chart
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Despite the small declines in the Dow (-0.4%) and the S&P 500 (-0.5%), fear spread that the narrow band of trading is about to be broken by a sell-off. A small inflection point exists at Wednesday’s S&P 500 low at 2,171.25. Then there is the support of the sideways formation at the Aug. 2 low of 2,147.88, and then major support rendered by the 50-day moving average at 2,140.53.

Conclusion

MACD is oversold, volume on declines is very low, and buyers, when they appear, consistently outpace sellers. The well-known technical analyst Michael Ashbaugh said the 20-day moving average is an inflection point. The S&P 500 closed below its 20-day at 2,177.04 on Wednesday on very low volume.

Unless you are a day trader playing the hourly trends, my read of the market is bullish. The S&P 500 could temporarily slip below 2,148. If it does, adding high-quality stocks is a solid strategy since the best is yet to come.

Today’s Trading Landscape

To see a list of the companies reporting earnings today, click here.

For a list of this week’s economic reports due out, click here.


Article printed from InvestorPlace Media, https://investorplace.com/2016/08/daily-market-outlook-best-yet-come-market/.

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