On Tuesday, stocks advanced slightly while trading in a narrow zone for most of the session.
Manufacturing stocks led the Dow Jones Industrial Average with Caterpillar Inc. (NYSE:CAT) up 2%, United Technologies Corporation (NYSE:UTX) gained 0.9%, and Boeing Co (NYSE:BA) jumped 1.2%.
On the broader front, the S&P 500 inched out a gain of 0.1% helped by the energy sector, which rose 0.7%. Crude oil (WTI) for May gained 1.6% to $51.03 per barrel. However, even with gains in oil and natural gas prices, the index traded within a ten-point range for the entire day.
At the close the Dow Jones Industrial Average gained 39 points at 20,689, the S&P 500 closed at 2,360 for a one-point gain, the Nasdaq rose 4 points, closing at 5,899, and the Russell 2000 fell one point to 1,368. The NYSE’s primary exchange traded 801 million shares with total volume of 3.2 billion shares. The Nasdaq crossed 1.8 billion shares. On the Big Board, advancers slightly exceeded decliners, and on the Nasdaq, decliners led by 1.4-to-1. Blocks on the NYSE rose to 6,739 from 6,304 on Monday.
The favorite index for economists is the Dow Jones Transportation Average. The index is purported to reflect economic conditions six to nine months in advance. Currently the macro trend is up, but the near-term is shaky.
Last week’s break of the Dow Jones Transportation Average’s 50-day moving average by its 20-day (green line) signaled a near-term break. And the break was further compounded by five days closing below the support line at 9,045.
The Dow Jones Industrial Average is having its own problems: After topping in March at 21,169, the index has been stymied by a short-term trend line that is holding back rallies at roughly the 20-day moving average. Prices are being squeezed between the 50- and 20-day MA’s. Volume is contracting on advances and increasing slightly on advances — not a favorable pattern.
Conclusion: Stocks have enjoyed a major advance in just the first quarter. Our charts show that the advance has exhausted further buying despite reports of major amounts of money on the sidelines. Waiting for bullish commitments from blocks of institutional buyers can be boring. But, in the long run boring is good. Therefore, let’s wait it out. A pullback to Dow 20,200 is a possibility,
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.
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