With public optimism strong over Q2 earnings expectations, stocks opened higher Monday. However, the first few minutes of trading saw the high of the day, and the major averages flatlined for the next six and a half hours.
A lagging technology sector, driven lower by a 3.62% plunge in Intel (INTC), lost 0.1%. But money flowing from bond sales continued to drive stocks higher rather than earnings since some analysts estimate that over half of the S&P 500′s companies will miss their Q2 forecasts.
At Monday’s close, the Dow Jones Industrial Average had gained 89 points at 15,225, the S&P 500 rose 9 points to 1,640, and the Nasdaq gained 5 points to 3,485. The NYSE traded 906 million shares and the Nasdaq crossed 396 million. Advancers outpaced decliners on the Big Board by 1.6-to-1, and on the Nasdaq, advancers were ahead by 1.3-to-1.
Each of the major indices has closed above its 50-day moving average and received a strong buy signal from its MACD.
Conclusion: The bulls are in charge of the market despite some technicians’ continued complaints of low volume, narrow breadth, etc. I was surprised to read that one noted and highly respected analyst is predicting a double-top between S&P 1,650 and the May 22 intraday high of 1,687.18.
But I was also reminded of Joe Granville’s warning that to act on a formation before it is executed is the most common mistake of technicians. And our readers have seen me say that to anticipate a formation is gambling against the trend.
The trend always takes precedence, and it is up until proven otherwise.
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.