Stocks were mixed Friday with the S&P 500 and Nasdaq eking out small gains. Crude oil prices bounced off multiyear lows to close at $75.82. Black gold has fallen more than 30% since June, and the Energy Select Sector SPDR ETF (XLE) is down 10.5% over the past three months.
Retail sales increased by a better-than-expected 0.3% in October, and a survey of U.S. households indicated that consumers are feeling the most optimistic about the economy since before the financial crisis. But investors are still worried about slow economic growth in Europe. Data from two key economies, Germany and France, showed slowing growth in the third quarter.
Nordstrom, Inc. (JWN) rose 1.3% after reporting better-than-expected Q3 results, with sales up 9% year over year.
Gold rose 2.1% to $1,185 an ounce. And the yield on the 10-year Treasury note fell to 2.32% from 2.35% on Thursday.
At Friday’s close, the Dow Jones Industrial Average fell 18 points to 17,635, the S&P 500 was even at 2,040, the Nasdaq rose 8 points to 4,689, and the Russell 2000 fell 2 points to 1,174.
For the week, the Dow and S&P 500 gained 0.4%, the Nasdaq was up 1.2%, and the Russell 2000 broke even.
In Friday’s Daily Market Outlook, I summarized the difficulties small-cap stocks were having just to maintain their gains. The Russell 2000 issued a clear sell signal from my proprietary internal indicator, the Collins-Bollinger Reversal (CBR).
Mid-cap stocks, as represented by the SPDR S&P MidCap 400 ETF (MDY), attracted sellers last week (see volume on the chart), and MACD is falling as well. But a price decline that could push its 50-day moving average at $252 through its 200-day moving average at $251 is a very real possibility, which would result in a strong sell signal.
Conclusion
While the major indices are still moving ahead, it is clear that the pace has considerably slowed. The Dow Jones Industrial Average has thus far gained just 1.4% in November compared with a 9.7% gain from its Oct. 15 low through Oct. 31.
On Friday, the NYSE’s primary market traded just 705 million shares with total volume of 3.2 billion shares. The Nasdaq crossed 1.7 billion shares. Much more volume is required to confirm a breakout. On the Big Board, advancers were slightly ahead of decliners, but on the Nasdaq, decliners slightly outpaced advancers.
As noted on Friday, “Common sense tells us it is time for a rest. Sure, we would like stocks to rise indefinitely, but we all know they don’t. Unless you’re a long-term investor, increase cash holdings and wait for the next opportunity to buy.”
Now the charts are telling traders — both monthly and daily — to sell.
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.
