Surrendering Some Of Yesterday’s Gains

The stock market endured a broad-based retreat on Tuesday that caused the S&P 500 (-0.5%) to surrender the bulk of its advance from Monday. The benchmark index settled ahead of the Nasdaq Composite (-0.6%) with eight sectors registering losses. All in all, it is worth pointing out that today’s pullback occurred after the S&P 500 rallied nearly 3.5% in just three weeks, suggesting the retreat resulted from profit taking after a big run.

Health care and technology both suffered from losses among high-beta components. The iShares Nasdaq Biotechnology ETF (IBB 337.92, -1.83) settled lower by 0.5% after being down as much as 1.7% in the early going. Meanwhile, chipmakers pressured the technology sector after Micron (MU 29.67, -1.57) was downgraded to ‘Neutral’ at Nomura. Shares of MU fell 5.0% while the broader PHLX Semiconductor Index slumped 1.9%.  You remember that the semiconductor group had an outstanding day yesterday.

The McClellan Oscillator has been putting in lower highs as the market indexes tag highs, so this is a negative divergence and is certainly something to keep our eyes on.  It could be a sign that the bulls may be having a harder time holding things together here, at least very short term.


See you in the morning.

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