Market Continues to Get Squeezed

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On Tuesday, the price of crude oil rose for the fourth consecutive day, pulling the overall stock market up with it. Volume was again on the low side due to apparent caution over pending Q1 earnings on the part of investors.

Energy stocks rose 1.8% on a 2.7% jump in oil prices to $53.29 a barrel. In the month of April, crude has risen 12% but is still off 48% in the past year. Some analysts say that the wide spread between last year’s high and this year’s low gives oil plenty of room to move up.

March retail sales rose by 0.9%, but came in below expectations of a 1.1% increase, putting a damper on a possible advance in the sector.

The Dow Jones Industrial Average benefited from a 1.6% rally in JPMorgan Chase & Co. (NYSE:JPM) on better-than-expected earnings. The bank’s gain added about 6 points to the blue-chip index.

Core producer prices increased 0.2%, matching the consensus estimate.

Gold prices for June delivery fell 0.6% to $1,192.60 an ounce, the lowest settlement since March 31. And the U.S. dollar fell 1% against the euro, closing at $1.06.

The Dow Jones Industrial Average rose 60 points to 18,037, the S&P 500 gained 3 points at 2,096, the Nasdaq fell 11 points to 4,977, and the Russell 2000 closed flat at 1,265.

The NYSE’s primary market traded 691 million shares with total volume of 3.3 billion. The Nasdaq crossed 1.6 billion shares. On the Big Board, advancers outpaced decliners by 1.7-to-1, and on the Nasdaq, decliners were ahead by 1.1-to-1.

S&P 500 Chart
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Chart Key

The S&P 500 is trading in a narrow zone bordered by resistance at 2,094, which was slightly broken Tuesday, and support at 2,064. There is an additional support/resistance zone in the minor triangle at 2,062 to about 2,120. The 20-day moving average at 2,082 and the 50-day moving average at 2,081 squeeze the movement of the index even more.

Conclusion

The market’s squeeze is most pronounced on the S&P 500. As noted above, the trading boundaries are very tight and could break in either direction.

In Tuesday’s Daily Market Outlook, I focused on the Dow Jones Transportation Average, pointing out that a further breakdown there could cause a problem for the bulls. But Tuesday’s close at just above the index’s 200-day moving average at 8,681.72 (8,697.79 close), again offered no guidance as to its eventual direction. However, the transports traded below their 200-day moving average for most of the morning before an afternoon rally closed the index above this important line.

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-sp-500-continues-to-get-squeezed/.

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