Don’t Get Your Hopes Up for This Summer

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Stocks fell slightly Thursday, and despite some positive earnings reports were unable to overcome a lower opening. The reason for the early selling was Greece’s request to reschedule debt repayments due in May.

Three of the S&P’s 10 sectors registered gains, including financials. The Select Sector Financial Slct Str SPDR Fd (NYSEARCA:XLF) was up 0.2% following better-than-expected earnings from Citigroup Inc (NYSE:C) and Goldman Sachs Group Inc (NYSE:GS).

The Technology SPDR (ETF) (NYSEARCA:XLK) fell 0.4% after SanDisk Corporation (NASDAQ:SNDK) and Taiwan Semiconductor Mfg. Co. Ltd. (ADR) (NYSE:TSM) provided weak guidance. But Netflix, Inc. (NASDAQ:NFLX) shone brightly, gaining 18.2% after it issued a statement that it added 4.88 million subscribers in the first quarter, surpassing its own forecast of 4.05 million.

In addition to some domestic earnings disappointments, losses on the European bourses had a negative impact on U.S. markets. The German DAX fell 1.9% and France’s CAC dropped 0.6%, with losses blamed on the Greek situation.

Crude oil futures rose for the sixth consecutive session, gaining 0.6% at $56.71 a barrel. However, energy stocks did not follow suit with Energy Select Sector SPDR (ETF) (NYSEARCA:XLE) falling 0.2%. Gold prices declined 0.3%, closing at $1,198 an ounce.

In economic news, weekly initial jobless claims increased to 294,000 while the consensus was looking for a decline to 280,000. Housing starts were up 2% in March to an annual pace of 926,000, but the consensus had expected an increase to 1.04 million.

At Thursday’s close, the Dow Jones Industrial Average fell 7 points to 18,106, the S&P 500 was off 2 points at 2,105, the Nasdaq lost 3 points at 5,008, and the Russell 2000 was down 2 points at 1,273.

The NYSE’s primary market traded 755 million shares with total volume of 3.4 billion. The Nasdaq crossed 1.7 billion shares. On the Big Board, decliners outpaced advancers by 1.3-to-1, and on the Nasdaq, decliners were ahead by 1.1-to-1.

SPY Chart
Click to Enlarge

Chart Key

I chose the SPDR S&P 500 ETF Trust (NYSEARCA:SPY) for today’s chart in order to demonstrate the lack of follow-through after the break through a well-defined triangle, as well as the 50-day moving average.

Note the declining volume and flat MACD — both indications of a lack of enthusiasm on the part of buyers.

Conclusion

Although the major indices are making progress, with small caps in the lead, that progress is maddeningly slow.

Several years ago, a breakout of a major technical feature would have been followed immediately by a high-volume continuation pattern. Instead, buyers are few and volume is relatively low with negative breadth.

Even the Russell 2000, which broke to new highs on Wednesday, fell on low volume. And its breakout was accompanied by only average volume.

I read the meaning of this lethargy as an indication that after five and a half years this bull is getting long in the tooth. I’m not implying that a bear market is about to begin, but we will have to accept the fact that high momentum will probably not be a characteristic of a further advance. Investors are focusing on earnings with one eye on the Federal Reserve’s intentions regarding interest rates.

This could turn out to be a long, but not very hot summer for stocks.

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.


Article printed from InvestorPlace Media, https://investorplace.com/2015/04/daily-market-outlook-dont-get-your-hopes-up-for-summer/.

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