A rally in beaten-down biotechnology stocks and the overall health care sector helped the Nasdaq close higher for the second straight session. The tech-heavy index advanced 0.3%, while the S&P 500 was up 0.1% and the Dow Jones Industrial Average fell 0.2%.
The iShares NASDAQ Biotechnology Index (ETF) (IBB) was up 2.6%, logging one of its best days in weeks. Allergan plc (AGN) and Mallinckrodt PLC (MNK) each gained more than 6%, and Teva Pharmaceutical Industries Ltd (ADR) (TEVA) rose 5.1% following a better-than-expected earnings report.
Oil fell 2.7% to $43.44 a barrel on repots a fire threatening the oil-sands region of Canada was slowing.
Gold closed down 2.1% at $1,266.60 an ounce, as a strong U.S. dollar drove investors from the precious metals. The dollar’s advance was due in part to lower-than-expected inflation from China despite the government’s stimulus programs.
The yield on the 10-year U.S. Treasury note fell to 1.77% from 1.79% on Friday.
At Monday’s close, the Dow Jones Industrial Average was down 35 points at 17,706, the S&P 500 gained 2 points at 2,059, the Nasdaq rose 14 points to 4,750, and the Russell 2000 was up 4 points at 1,118,
The NYSE Composite’s primary exchange traded 966 million shares with total volume of 3.7 billion. The Nasdaq crossed 1.6 billion shares. On the Big Board, decliners outpaced advancers by 1.2-to-1, and on the Nasdaq, advancers led by a small margin. Block trades on the NYSE rose to 5,730, up from 5,712 on Friday.
The small-cap iShares Russell 2000 Index (ETF) (IWM) has fallen through the first line of support — the 200-day moving average at $111.55. But due to Monday’s small positive close, IWM held above the next support line, the 50-day moving average at $109.86. Volume is lagging and MACD is negative.
The SPDR S&P MidCap 400 ETF (MDY) is in better shape than IWM. It is firmly above its 200-day moving average at $256.13, and even above its 50-day moving average at $260.70. But despite a golden cross (50-day moving average crosses up through the 200-day), volume remains low and MACD is negative.
Conclusion
It appears that an ongoing consolidation is occurring. But upside volume is lacking in both IWM and MDY while MACD is negative. With such contrary information, it is difficult to have a strong bullish or bearish bias.
Historically, the month of May has not been kind to investors. So, until the market charts a more definitive course, I remain neutral while searching for stocks that offer value with less risk, like my Trade of the Day.
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.
