On Friday, all 10 sectors of the S&P 500 rose, but blue chips lagged and so did the Dow Jones Industrial Average. The Nasdaq led the other indices as a result of a strong performance by the biotech group.
The iShares Nasdaq Biotechnology (IBB) was up 1.1%. Additionally, Facebook (FB) rising 3.8% and news that Twitter had filed for listing helped the Nasdaq outscore the other indices.
But despite the gains in the stock market, little progress appears to have been made on reopening the government. Republicans blamed the president for refusing to negotiate on changes to Obamacare, and Democratic leaders responded with a petition that could force a vote on funding the government without any defunding of the health care law as soon as Oct. 14.
The Institute for Supply Management’s non-manufacturing purchasing managers index (PMI) indicated that the economy is growing at a slower pace than last month. The employment report for September was postponed because of the shutdown.
At Friday’s close, the Dow Jones Industrial Average rose 76 points to 15,073, the S&P 500 gained 12 points at 1,691, and the Nasdaq added 33 points at 3,808. The NYSE traded 597 million shares and the Nasdaq crossed 359 million. Advancers were ahead of decliners on both exchanges by just over 2-to-1.
For the week, the Dow fell 1.2%, the S&P 500 fell 0.1%, and the Nasdaq rose 0.7%.
The S&P 500 is barely holding on to support (see Oct. 3 Daily Market Outlook) at the 1,676 support line and its 50-day moving average at 1,680. However, the more aggressive stocks, as represented by the Nasdaq, keep plowing ahead.
The Nasdaq’s chart shows a series of bullish flags with support above and below the 20-day moving average, while the 50-day moving average tracks the support line of the bullish channel.
MACD has issued a sell signal, but since price has priority, I wouldn’t give it much weight.
Conclusion: As noted last week, the stock market is in the hands of the politicians, but despite that, the charts of the various indices do show patterns that indicate levels of support. For example, on Thursday’s chart of the S&P 500, note how the confluence of the 50-day moving average and the 1,676 line provides a meaningful area of tension.
Nevertheless, the current market’s short-term direction is being impacted by the daily headlines. This condition will probably continue for several weeks unless the politicians get their act together before then.
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.