S&P 500 Trading Is Growing Even More Sluggish

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As anticipated, on Tuesday Netflix, Inc. (NASDAQ:NFLX) opened higher and led the stock market to a positive close. Earnings, well above the most optimistic forecasts, drove the stocks to a gain of almost 20%. And the results lifted the S&P 500 to its best day of the month.

Five large-cap stocks reported better-than-expected quarterly results: Netflix, UnitedHealth Group Inc (NYSE:UNH), International Business Machines Corp. (NYSE:IBM), Goldman Sachs Group Inc (NYSE:GS) and Johnson & Johnson (NYSE:JNJ) all topped estimates, but JNJ and IBM closed lower.

Biotechnology stocks helped raise the Nasdaq as its Biotechnology Index rose 1.4%, and the exchange-traded fund iShares NASDAQ Biotechnology Index (ETF) (NASDAQ:IBB) rose a like percentage. Healthcare stocks were also strong, after being drubbed for week, rising 1.1%.

It appears, in light of yesterday’s gains, that the market may have discounted a rise in short-term rates this year. Federal Reserve Vice Chairman Stanley Fischer, on Monday, was mentioned as saying that the central bank is near its “official policy goals.” And there may be a majority of Fed members who are willing to consider raising rates in December.

The benchmark 10-year Treasury note fell to 1.7% from 1.8% on Monday. Crude oil rose to $50.29 per barrel, up 0.7%.

At the close on Tuesday the Dow Jones Industrial Average rose 76 points at 18,162, the S&P 500 gained 13 points to close at 2,140, the Nasdaq added 44 at 5,244 and the Russell 2000 gained 7 at 1,217. The NYSE’s primary exchange traded 742 million shares with total volume of 3.1 billion shares. Nasdaq crossed 1.5 billion shares. On the Big Board, advancers outpaced decliners by 3.2-to-1, and on the Nasdaq, advancers led by 1.8-to-1. Blocks on the NYSE increased to 5,045, up from 4,374 on Monday.

S&P 500 twice range bound
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S&P 500 Trading Is Growing Even More Sluggish

The S&P 500 did well to bounce from the support line at 2,115 on Thursday. But the rally only lasted for two days when on Monday it fell back close to the support line at 2,115. Even if it managed to jump to the next level, that puts it in a range of 2,145 to 2,177 — not even enough range for traders do their thing. MACD is coming off of an oversold situation, but volume continues to be a problem — higher on selling days and lower on buying days, a poor pattern for the bulls.

Conclusion: The overall stock market is bullish (long term). But near term we are faced with a very sluggish market caused by traders willing to settle for what we called “eighths and quarters” rather than a more acceptable day trade of 1-2%.

When will it end? When the Fed decides to really hike rates rather than continuing to talk about it. Another old saying: “Talk is cheap.”

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/2016/10/sp-500-sluggish/.

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