Despite what appeared to be a host of reasons for a broad decline, stocks closed mixed to higher Thursday with small and mid caps higher. The S&P 500 rose just 0.1%, while the Dow fell 0.1%.
The energy sector started lower but rallied in the afternoon, closing with a gain of 0.1%. Chevron (CVX) fell 0.4% and Exxon Mobil (XOM) rose 0.2%. The energy sector is down 3.8% in September.
Profit-taking appears to be the cause of a recent decline in biotech stocks. The iShares Nasdaq Biotechnology ETF (IBB) lost 0.4%.
Weekly initial jobless claims increased to 315,000 versus an expected decline to 300,000. And the U.S. Treasury budget for August showed a deficit of $129 billion compared to an estimated $130 billion.
Despite strength in the small and mid caps, the Dow and NYSE Composite can’t seem to keep momentum high enough to confirm a breakout. And now the MACD of the NYSE has flashed a sell signal.
Even though the index closed above its 50-day moving average at 10,925 on Thursday, and flashed a buy from my proprietary indicator, the Collins-Bollinger Reversal (CBR), on Wednesday, traders should wait until the market decides on its next direction.
Conclusion
If history is a guide to future action, then next Friday could be very volatile with the triple witching expiration of September options. Traders should be cautious and mindful of support and resistance lines. Don’t go out on a limb or you may find that someone is cutting it off at the trunk.
And I repeat the warning I gave Tuesday: “As for September usually being a negative month, if you discard the final week’s end-of-quarter institutional evening up, September is average.
“But don’t be long the week following options triple witching day, which occurs Friday, Sept. 19 this year. According to the Stock Trader’s Almanac, since 1991, only five of those weeks ended up and 17 were down. And in 2011, that week ended with a Dow loss of 737.61 points.”
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.
