After a string of all-time highs, investors seemed reluctant to chase stocks on Tuesday. Trading was also impacted by the close of the bond markets for Veterans Day.
Homebuilders were strong with D.R. Horton, Inc. (DHI) up 2.2% after reporting higher orders and closings even though its earnings were less than expected. The iShares Dow Jones US Home Construction (ITB) rose 1.7%.
Japan’s Nikkei 225 jumped 2% to its highest close since October 2007, following a Reuters report that the prime minister is likely to push back the next sales tax increase. The yen fell to a seven-year low versus the U.S. dollar.
Juniper Networks, Inc. (JNPR) fell 5.7% after its CEO resigned following a review of his conduct.
The materials sector rallied as the Market Vectors Gold Miners ETF (GDX) rose 4.4%. Gold futures rose 0.03% to $1,163 an ounce, and silver futures gained 0.04% to $15.68 an ounce.
At Tuesday’s close, the Dow Jones Industrial Average gained 1 point at 17,615, and the S&P 500 also rose a point to 2,040. The Nasdaq was up 9 points at 4,661, and the Russell 2000 was unchanged at 1,180.
The NYSE’s primary market traded 814 million shares. Total NYSE volume was 2.9 billion shares, and the Nasdaq crossed 1.6 billion shares. On the Big Board, advancers were slightly ahead of decliners, but on the Nasdaq, decliners outpaced advancers by 1.2-to-1.
The Dow Jones Transportation Average had an excellent run since the October low. This index is telling us that industrial production in the next 6-9 months is looking good.
In the near term, however, look for a price adjustment since every time the index has popped through its long-term support/resistance line, it quickly adjusted back to a more normal trend.
The most glaring example was in October when panic selling drove the index below 8,000. But the break of its 200-day moving average, though a heart-stopper, lasted for just four days before reverting to the mean.
Conclusion
Volume was low and breadth meaningless in a day when most of Europe was closed in remembrance of veterans. But the markets that were open are all overbought. It is time for an adjustment in prices.
Don’t be caught with a fully invested portfolio at a time when the market is obviously in a technically overbought condition.
And thanks to all who have served. It would be a much different world had many of them not made the supreme sacrifice.
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.
