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Stock Market Losses Deepen, But Volume Falls

The stock market was firmly lower near midday Tuesday, but volume fell off sharply. Big names in the Dow Jones industrial average bled with Caterpillar (CAT) losing 3.8% and Apple (AAPL) and Intel (INTC) down about 2% each.




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As the market approached the noon hour, the Dow Jones industrial average was off 0.8%; the Nasdaq, 1.1%; and the large cap S&P 500, 0.9%. Small caps did worse with the Russell 2000 down 1.7%.

Volume ran lower than the previous session.

Only a handful of stocks broke out. Gildan Activewear (GIL) climbed to a 34.29 buy point and then eased just under the entry.  Managed-care provider Centene (CNC) showed similar action around a 148.34 buy point but lacked strong volume.  Gold miner AngloGold (AU) flirted with a 10.57 buy point in a cup with handle base.

One flaw so far in the current uptrend is the scarcity of breakouts. The stock market still has time to shift into a faster gear. IBD-style investors should watch recent buys closely and tidy their watch lists.

Blue Chips Down

Blue chips in the 30-component Dow Jones were mostly down. Caterpillar unwound all of Monday’s 2.4% gain. Intel did the same. Apple fell but kept part of Monday’s 3.5% pop after HSBC downgraded shares to hold.

In the IBD 50, a proxy for top-rated stocks, retail stocks took hard hits in fast trade. Dollar General (DG) gapped down 5% on a weak outlook tied to hurricane costs. Five Below (FIVE) skidded 3%; the company pushed back its conference call to Thursday but will nonetheless release results after the close Wednesday. Ulta Beauty (ULTA), which will report after the close Thursday, stabbed 4% lower. Lululemon Athletica (LULU), which also will report after Thursday’s close, dipped 1%.

On the upside of retail, restaurant chain Wingstop (WING) edged up 0.6% in soft volume. In the meantime, upscale home furnishings chain RH (RH) jumped 16% after trouncing views on earnings by 36%.

Yield Curve And The Stock Market

Some market watchers worried as the yield curve flattened to 12 basis points between the 10-year Treasury and the 2-year note. The fear is that an inverted yield curve signals the coming of a recession.

The problem is that the recession is sometimes a year or two in coming, which makes this indicator of little use to traders. A look at the past 20 inversions found no actionable trend overall. The market rose after the inversion about as often as it fell.

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