Following a lower opening on Wednesday, stocks rose quickly, making up the losses in just an hour. But in the afternoon, they turned down following the publication of the minutes of the Federal Reserve’s latest policy meeting at which there appeared to be intense debate regarding the timing of a raise in interest rates.
But buyers seemed determined to ignore the Fed’s debate and took the opportunity to grab high-profile blue-chip stocks like Boeing (BA), which rose 1.4%, and General Electric (GE), which was up 1.2%. Home Depot (HD) led the Dow stocks with a gain of 2.9%, which was a continuation of buying following Tuesday’s 5.6% gain that resulted from strong Q2 earnings. The S&P 500 missed a new all-time high by less than 0.1%, and eight of its 10 sectors advanced.
PetSmart (PETM) rose 1.2% after saying that it would be cutting costs and was seeking a possible sale of the company. Retail stocks were strong with the SPDR S&P Retail ETF (XRT) gaining 0.7%.
The 10-year Treasury note fell seven ticks, and its yield rose to 2.43%.
But the big financial news of the week is yet to come when Fed Chart Janet Yellen and European Central Bank President Mario Draghi speak at the annual central bankers meeting in Jackson Hole, Wyo.
At Wednesday’s close, the Dow Jones Industrial Average rose 60 points to 16,979, the S&P 500 gained 5 points to 1,987, the Nasdaq fell a point to 4,526, and the Russell 2000 fell 5 points to 1,158. The NYSE’s primary market traded 542 million shares with total volume of 2.5 billion shares. The Nasdaq crossed 1.5 billion shares. On the Big Board, advancers and decliners was almost even, but on the Nasdaq, decliners outpaced advancers by 1.7-to-1.
There have been several questions during the past several days regarding Bollinger Bands. The bands are constructed by plotting 2 standard deviations above and below a nine-day moving average. Many analysts believe that when prices “hug” either the upper or lower band, it is a signal of an “overbought” or “oversold” price structure. But that is not my opinion.
Bollinger Bands are just one tool in the technician’s box, but I use them as the heart of my proprietary indicator, the Collins-Bollinger Reversal (CBR), which I will describe in tomorrow’s Daily Market Outlook.
For now, the point I’d like readers to remember is this: A market that is running against the upper band is not necessarily overbought. In fact, the chart of the S&P 500 shows that from March of this year to the present, prices mostly hugged the upper band. However, as we will see tomorrow, piercing either the upper or lower band can produce remarkable results.
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.
