On Monday, stocks fell, ending the month lower as earnings and the pre-election drama dominated the trading floors. It was the Dow’s third consecutive monthly fall, but even though the headlines highlighted the drop as the “worst for the S&P 500 since January,” it amounted to a mere 42-point fall, .02%, for the index. (See 17-month moving average chart, below.)
Moving into a week dominated by major corporate earnings, a Federal Reserve meeting and the monthly jobs report on Friday, all of this in front of a presidential election next week, it is no wonder that sellers would dominate the closing day of the month — Halloween.
Another dominating feature of the last trading day was a decline in crude oil, settling at $46.84, off 3.9%. The recent failure to hold above the $50 per barrel mark is a failure by OPEC to agree on production cut allocations, or even an overall average limit to production.
In addition to a Fed meeting this week, the Bank of England meets on Thursday to decide whether the central bank will ease policy further following the damage by Brexit. They eased some last month, but little impact was observed on the British economy.
Yesterday nine of the S&P’s eleven sectors rose, with utilities in the lead (up 2%), followed by real estate (1.4%) and industrials (0.2%). Energy and healthcare finished lower by 1.2% and 0.6%, respectively.
At the close the Dow Jones Industrial Average was off 19 points at 18,142, the S&P 500 fell less than a point at 2,126, the Nasdaq lost a point at 5,189 and the Russell 2000 closed at 1,191, for a gain of 4 points. The NYSE’s primary exchange traded over 1 billion shares, with total volume of 3.9 billion shares, and the Nasdaq crossed 1.7 billion shares. On the Big Board, advancers led decliners by a slight margin, and on the Nasdaq, decliners led by a like margin. Blocks on the Big Board fell to 6,678 vs. 7,575 on Friday.
As noted above, the press made much of the 0.02% fall in October vs. November. It was a drop of about 42 points, but of more significance is the tide of pressure that resulted in a small decline. The drop, however, closes the gap between the October close and the 17-month (red line) moving average to 62 points and a sell signal if the index crosses below it.
The daily chart shows higher-than-normal selling for five sessions. A triple bottom at 2,115 is highlighted, and if it folds the next support is at the 200-day moving average (2,079).
Conclusion: At the current point above support on the S&P 500, I wouldn’t get very negative. The daily chart of the 500 has lots of support, but a fall to the 200-day MA would shake up the traders. Not a pretty Halloween picture. Once the election is over perhaps we’ll get some stability, then again…
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.
