On Monday, a slide in crude oil prices and a bond market holiday due to Columbus Day led to sluggish trading. The major indices traded in a narrow range and finished the day higher, but only slightly.
Energy stocks fell following the prior week’s strong buying. Chevron Corporation (CVX) was down 0.9% while BP plc (ADR) (BP) fell 1.7%. Crude oil futures closed down 5.1% at $47.10 a barrel. The reason for the sharp sell-off was an increase in production by OPEC countries in September.
Gold was up 0.7% to $1,164.90 an ounce on expectations that an interest rate increase by the Federal Reserve would be delayed until next year. The U.S. dollar fell for the same reason, off 0.2% versus a basket of currencies. The euro closed at $1.1373, up 0.1%.
At Monday’s close, the Dow Jones Industrial Average rose 47 points to 17,132, the S&P 500 gained 3 points at 2,017, the Nasdaq was up 8 points at 4,839, and the Russell 2000 fell a point 1,164.
The NYSE Composite’s primary market traded less than 700 million shares with total volume of 2.9 billion. The Nasdaq crossed 1.3 billion shares. On the Big Board, advancers slightly exceeded decliners, and on the Nasdaq, decliners led by a small margin.
Like the Nasdaq, which I discussed in the previous Daily Market Outlook, the Russell 2000, as evidenced by the iShares Russell 2000 Index (ETF) (IWM), is facing a crucial barrier. Both closed above their respective 50-day moving averages, but just barely, and against their intermediate trendlines.
IWM appears to be falling away from the Collins-Bollinger Reversal (CBR) signal of Sept 9. Monday’s low volume was not an issue because of the bond holiday.
Conclusion
All of the indices have risen from what the bulls hope is a double-bottom. But it is much too early to count on a bottom and a subsequent change in trend since there is a heavy band of overhead for each index.
Since various preliminary bearish formations would result, a failure at the current level of resistance would be a disaster for the bulls. Divergences exist among the major indices, so a “no action” or “sell “approach is still warranted.
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.
