The S&P 500 and Dow industrials broke to new highs early Thursday, but fell back to close with only modest gains. The small-cap Russell 2000 underperformed, dropping nearly 1%.
Wal-Mart Stores, Inc. (WMT) reported its first quarterly sales increase since 2012, and same-store sales rose 0.5%. Management reduced its full-year earnings forecast to $4.92 to $5.02 per share versus a prior estimate of $4.90 to $5.15. Despite this, shares rose 4.7% and contributed 24 points to the Dow’s gain.
J C Penney Company Inc (JCP) fell 8.5% after reporting lower-than-expected Q3 revenue.
Big technology stocks did well, with Apple Inc. (AAPL), Intel Corporation (INTC), and Microsoft Corporation (MSFT) gaining. Cisco Systems, Inc. (CSCO) led, up 2.3% after beating earnings estimates.
Initial jobless claims increased to 290,000 while analysts expected 280,000. Job openings decreased to 4.735 million in September from 4.853 million in August.
The Dow Jones Industrial Average rose 41 points to 17,653, the S&P 500 gained 1 point at 2,039, the Nasdaq was up 5 points to 4,680, and the Russell 2000 fell 11 points to 1,175.
The NYSE’s primary market traded less than 7 million shares with total volume of 3.4 billion shares. The Nasdaq crossed 1.9 billion shares. On both exchanges, decliners outpaced advancers by about 2-to-1.
On a day in which the senior indices struggled to maintain gains, the Russell 2000 issued a clear warning from my proprietary internal indicator, the Collins-Bollinger Reversal (CBR).
From the chart, we see the CBR indicator, though not perfect, issued timely buy and sell signals at crucial points. In fact, it only missed the July-to-August decline and the August-to-September advance. Now the indicator is telling us to sell, and with MACD declining and the major indices struggling, it may be time to heed its warning.
Conclusion
My proprietary indicator confirms the Bollinger Band signals noted in the Nov. 11 Daily Market Outlook. Both indicators are telling traders who hold small-cap stocks that they should take profits.
Investors who are prone to trade on a three-to-six-month time frame should also take serious note of this signal.
As some of our readers have so eloquently stated, “The solders are in retreat.” And I would add that the word hasn’t yet been received by the “generals.” The Dow and S&P 500, and even the Nasdaq, have held up well.
But with the S&P 500 up 12% in just four weeks, 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.
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.
