On Monday, the week started slowly as investors seemed to have just one thing on their collective minds: the Federal Reserve’s meeting and a similar meeting at the Bank of Japan.
Early gains turned sour as the Dow turned a 131-point gain to a loss of 0.02% and the S&P 500 fell slightly while the Nasdaq lost 0.2%.
A rebound in crude oil was attributed to the early gains, and that from the Venezuelan President Maduro who stated that oil-producing countries were close to agreeing on a deal to stabilize oil markets. But that was questioned later when contradictory reports from OPEC’s Secretary General Mohammad Barkindo surfaced.
Few bond traders expect the Fed to raise rates this week, but the report issued after the meeting always provides grist for more talk. And the talk will probably be about a possible rate hike in December.
Crude oil (WTI) rose 0.6% to $43.30 per barrel on news of fighting in oil producer Libya.
Just three of the eleven sectors of the S&P 500 rose, with industrials, financials and utilities in the lead by 0.3%, 0.5% and 1% respectively.
At the close on Monday the Dow Jones Industrial Average fell 4 points closing at 18,120, the S&P 500 was slightly lower, the Nasdaq fell 10 points to 5,235 and the Russell 2000 closed with a gain of 8 points at 1,233. The NYSE’s primary exchange traded 780 million shares with total volume of 3.1 billion shares, and the Nasdaq crossed 1.8 billion shares. On the Big Board, advancers outpaced decliners by 2.1-to-1, and on the Nasdaq, advancers led by 1.5-to-1. Blocks on the NYSE fell to 4,627 from 6,739 on Friday.
After a magnificent run from the June low, the Nasdaq has backed away from a quadruple top at about 5,280. And the resistance has been accompanied by higher-than-average volume.
The latest attempt to break out of this sideways movement was preceded by a buy signal from my proprietary indicator, the CBR (Collins-Bollinger-Reversal). But that reversal was good for just 180 points.
The Russell 2000, which is composed mainly of small-cap stocks, gained when the major indices fell. It has been moving within an irregular bull channel since February, while fluctuating around its 50-day moving average. MACD is recovering after a minor dip. Volume, though not available in this chart, has been above average on both accumulation and distribution days.
Conclusion: The move higher by the Russell indicates that speculators are willing to trade even in the hours prior to a major meeting of the Fed.
I’m not overjoyed by the two days of 90% down, as measured in the advance and decline of volume — both in the last month. And the resistance at S&P 500 that begins in mid-July is “massive” (Jeff Saut’s words).
The market’s reaction to the Fed’s “after-action-report” may reveal the next direction of the market. Then again, perhaps not.
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.
