Karpel’s Weekly Update On Tap: ($ITB, $HACK, $JETS)

July 22, 2015
By Vlad Karpel

Stocks continue to be weak across the board with the Dow Jones ($DJX) leading the way lower. United Technologies ($UTX) and $IBM lead the weakness in the blue chip index after Big Blue ($IBM) missed on revenues and United Tech ($UTX) was down-graded. These are both expensive stocks and since the Dow Jones ($DJX) is a weighted index, with high prices carrying the most weight, explains their affect on the index.

Looking at the offensive sectors we see that Tech stocks ($QQQ) are under pressure this week. The most notable names are Apple ($AAPL) and Microsoft ($MSFT), trading down 5 percent and 3 percent at the time of writing this piece. In Apple ($AAPL), concerns have risen since the latest release showed a drop in iPhone Sales and Microsoft disappointed on earnings. Watch these earnings closely, this could offer great insight into what the next move of the Fed could be in September.

There have been some sectors that have not succumbed to the selling bug. Most notably: Home Construction ($ITB), Cyber Security ETF ($HACK), Leisure and Entertainment ($PEJ), Insurance ($KIE), and Airline ($JETS), all managed to gain.

With the latest pullback in commodities, the consumer could have a welcome stimulus later this summer and early fall. Prices at the pump and at the stores could be pulling back. This means that more dollars saved could equal more purchases. Since we are nearing the end of the summer leisure season, the back to school supplies, clothing purchases, and business travel season will start to pick up in September.

Airlines ($JETS) have a potential double bottom off of the $22 price in the works.  A challenge and break of the $23.69 level on the upside would be a bullish signal for this sector.

Have a great trading week.

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