foxex: Weak Tech Warning

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Chart Advisor | Focus on the Price

By Gordon Scott, CMT

Monday, August 10, 2020 Headlines

1. Nasdaq shifts lower as S&P 500 holds ground

2. Airline industry breaks upward on good news

3. Technical signals appear as United Airlines surges

Market Moves

Stock indexes posted a mixed closing. This shouldn't be a big deal except that some version of this outcome has been happening for several days now, and it is creating a pattern of relative weakness among big tech stocks. The S&P 500 index (SPX) closed a quarter-percent higher while the Nasdaq 100 index (NDX) fell by one-half percent.

The chart below shows an intraday comparison between these two indexes over the past week, and also compares them to Apple (AAPL). Despite the fact that the most influential stock in both indexes is holding onto its recent gains, the NDX has simply deteriorated a little each day. This signals the possibility of more profit-taking in the near future on large-cap tech stocks.

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Airline Industry Breaks Upward on Good News

The Transportation Security Agency (TSA) announced that they had processed more passengers in the past three months than analysts expected. Unsurprisingly, investors crowded into these airline stocks. The chart below compares several of these companies with U.S. Global's Airline industry group index ETF (JETS). Those leading the charge came out above JETS on the chart, and the leader among them is United Airlines (UAL). This is a bit surprising since that company may have more challenges than most of the others in this grouping. But the nine percent increase in its share price speaks volumes about investor expectations.

Read more:

What to Expect in the Markets This Week

How Amazon Makes Money

Cisco Systems (CSCO) Could Gain Ground After Earnings

Technical Signals Appear as United Airlines Surges

The chart below takes a closer look at the price action for United Airlines (UAL). Three indicators are used to show how this unusual rise in price is likely to attract the attention of technical traders.

First, the Parabolic Stop-and-Reverse (PSAR) indicator has switched its orientation from short to long by breaking above the previous level of the red line. The previous two switches happened because the price moved in a tight range, showing that the stock has been resisting any downward momentum.

Next, the Connors Relative Strength indicator (CRSI) and the Money Flow index (MFI) are shown. The comparison of these two shows that both are making a series of higher lows, building a pattern of subtle-but-noticeable relative strength over the past several weeks.

The Bottom Line

Stocks in the S&P 500 rose a small bit today, helped in part by strength in the airline industry group. However, stocks in the Nasdaq 100 fell slightly, extending the relative weakness in this index to over a week now. Of the stocks poised to capture investor attention, United Airlines rose most strongly today.