On Monday, stocks opened flat, traded higher at midday, and closed flat. But the S&P 500 managed to squeak out a high for the second session in a row and for the sixth time in eight sessions. So far, the index has gained 4.7% in the month of October.
Apple (AAPL) gained 0.7% prior to its quarterly report following the closing bell. Merck (MRK) beat earnings forecasts but reported below-consensus revenue, and the stock fell 2.6%. CNBC reported that, thus far, the stocks of the S&P 500 have exceeded earnings estimates 64% of the time, but have only reported higher-than-expected revenues 54% of the time.
At Monday’s close, the Dow Jones Industrial Average fell 1 point to 15,569, the S&P 500 rose 2 points to 1,762, and the Nasdaq fell 3 points to 3,940. The NYSE traded 731 million shares and the Nasdaq crossed 527 million. Decliners outpaced advancers on the Big Board by 1.2-to-1, while the Nasdaq was essentially breakeven.
Monday resulted in a modest confirmation of the S&P 500’s break to a new high. It also confirmed that the penetration of the bullish resistance line at the top of its bull channel was no mistake. The index appears to be marching to new highs.
Traders may consider Wednesday’s low at 1,740 a good stop point, and those looking further ahead should be aware of the support at the 20-day and 50-day moving averages at 1,713 and 1,689, respectively.
The Dow Jones Transportation Average looks stronger with each session, which bodes well for the economy six to nine months from now. Support for the transports rests at the 20-day moving average at 6,731 and then the 50-day moving average at 6,588.
Conclusion: Even though the major indices, minus the industrials, have broken to new highs, volume remains low. This appears to be because the sellers are absent, and the public is like a kid on Halloween prepared to be scared by the first ghoul that jumps from behind. The industrials (see Friday’s chart) may lag until the results of the next Federal Reserve meeting. But it seems very unlikely that the Fed will take any meaningful action prior to next year.
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.