Wednesday’s session ended on a flat note after a volatile day of trading. Stocks rallied in the afternoon, but only managed to overcome losses sustained during the morning.
Fear of default by Greece was the cause of the early weakness. The lower opening came after the Germany’s finance minister said he did not expect a resolution to the problem on Wednesday. The current bailout plan is scheduled to expire at the end of February.
The Nasdaq managed to finish in the black, helped by a 2.3% gain in Apple Inc. (NASDAQ:AAPL). Additionally, ARM Holdings plc (ADR) (NASDAQ:ARMH) was up 3.2% on better-than-expected earnings boosted by strong iPhone sales. Akamai Technologies, Inc. (NASDAQ:AKAM) jumped 2.5% on Q4 earnings that rose 21%.
The utility sector was down again, with the Dow Jones Utility Average off 2.4%, taking it to a loss of 5% for February.
Crude oil fell 2.4% to $48.87 a barrel, and the energy sector was down 0.7%. Gold futures closed at $1,219, off 1%, and the 10-year Treasury note’s yield held steady at 1.99%.
At Wednesday’s close, the Dow Jones Industrial Average was off 7 points at 17,862, the S&P 500 closed flat at 2,069, the Nasdaq gained 14 points to 4,801, and the Russell 2000 fell 2 points to 1,202.
The NYSE traded a total of 3.6 billion shares, and the Nasdaq crossed 1.8 billion shares. On both major exchanges, decliners outpaced advancers by about 1.2-to-1.
Although it has been slow going, the S&P 500 is within striking distance of the early December high at 2,079 and its all-time closing high at 2,091.
MACD is mildly bullish. Support is first at the 50-day moving average at 2,043, and then the 200-day moving average and Collins-Bollinger Reversal (CBR) buy signal at just above 1,980.
The Nasdaq has a stronger bullish bias than any of the other major indices. A triple-top at 4,810, which must be considered a major inflection point, is now within easy reach.
Support is at the 50-day moving average at 4,711, and then the quadruple-bottom at 4,580. MACD is in the bull zone and arching up.
Conclusion
It may not be the prettiest prelude to a breakout, but unless something negative occurs, this week may see the Nasdaq break to a new 13-year high, though still shy of the all-time high at 5,133 made in March 2000.
If Nasdaq breaks to a new 13-year high, the saying “never sell a dull market” could be applied due to the lack of volume that is normally associated with major bull market confirmations and weak breadth. But volatility has been treacherous, and that too is more applicable to tops than breakouts.
With about 90% of the S&P 500 stocks having reported earnings and 73% beating estimates, 10% meeting estimates, and 13% falling shy, the fundamentals appear strong. I say “appear” only because the earnings estimates for many companies had been greatly reduced.
To me, it somehow just doesn’t all fit the pattern of a dynamic confirmation and smells more like the bull trap of December. For now, I’ll wait it out.
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.
