by Sam Collins | November 20, 2013 2:42 am
Stocks slipped Tuesday ahead of today’s release of the Federal Reserve’s latest meeting minutes. But the central bank seemed to be getting ahead of the announcement with Chicago Fed President Charles Evans saying he is “not in a hurry” to begin tapering the asset purchase program.
The Dow industrials briefly popped above 16,000 for the second straight day, but couldn’t hold the gain due to weaker-than-expected earnings from several blue chips, which dragged down the entire market.
Best Buy (BBY) fell 11% after quarterly earnings and revenues topped estimates, but management cautioned that competition would be stiff this holiday season. And Campbell Soup (CPB) fell 6% after it cut its full-year profit forecast following earnings that missed forecasts by a wide margin.
Helping the Dow was Home Depot (HD), which rose 0.9% after it exceeded estimates and raised its outlook for the third time this year.
At Tuesday’s close, the Dow Jones Industrial Average fell 9 points to 15,967, the S&P 500 lost 4 points at 1,789, and the Nasdaq dropped 18 points to 3,932. Primary market volume on the NYSE was 646 million shares, and total volume was 3.1 billion shares. The Nasdaq’s total volume was 1.7 billion shares. Decliners outpaced advancers on both exchanges by less than 2-to-1.
The chart of the NYSE Composite index illustrates one of the least volatile advances ever. With the exception of the May-June blip, the index had a steady climb.
Some might say this is because technology stocks have had a big move; however, the NYSE Composite is composed of a broad range of industries. So this year’s bull market has been supported by breadth that has included almost every sector.
Conclusion: Only the Dow Jones Industrial Average was bogged down following a strong run from January to May. And its five-month consolidation was finally broken last week with a breakout at 15,700.
This sets up the possibility for a broad market advance as the major indices attack the round numbers at Dow 16,000, S&P 1,800 and Nasdaq 4,000. Even though, as pointed out Monday, these round numbers have no technical significance, they could have huge psychological impact. Thus, with the exception of highly extended stocks, investors should remain long.
Nervous Nellies might want to protect positions by writing calls, but don’t give in to the fear being generated by the press. In my opinion, 2013 will end with a strong rally.
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.
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