Despite the unlikelihood that stocks could move higher for the sixth straight day, a weak U.S. dollar early in the day and assurances from a Fed governor that easy money policies would continue sent the Dow Jones Industrial Average (DJI) and other major indices higher. But the session was not without its difficulties.
AIG (AIG) fell 2.2% following a Wall Street Journal article saying that its CEO Robert Benmosche was about to quit. And Macy’s (M) said that Q4 could be soft and issued downside estimates. The stock fell 0.3%, and the retail sector fell, too.
Volume was light as a result of the Veterans’ Day holiday and the resultant closing of the fixed-income markets. Nine of the 10 major sectors finished with a gain. Utilities were the only sector to post a loss, falling 0.3%.
At the close, the Dow was up 44 points to 10,291, the S&P 500 (SPX) gained 6 points to 1,099, and the Nasdaq (NASD) rose 16 points to 2,167.
The NYSE traded just over 1 billion shares with advancers over decliners by 8-to-5. On the Nasdaq, 613 million shares were exchanged, and advancers also led by 8-to-5.
What the Markets Are Saying
As the major indices approach their bullish resistance lines, the pace of the six-day advance is slowing. Additionally, each of our most watched internal indicators — stochastic, Moving Average Convergence/Divergence (MACD) and momentum — are all overbought.
But offsetting that are the more positive sentiment numbers. We will get another American Association of Individual Investors (AAII) number today, but the last reading at over 55% bearish was extraordinary after making a sustained high-percentage move.
Investors Intelligence reports the advisers have dropped to their lowest point since July 24, and that, too, is odd. Meanwhile corporate insiders have cut back on selling stock.
Of course, what all of this could mean is that we might initially turn away from the overhead barriers and pull back to the midpoint of the current bull band before another attack on the highs.
Another, though less likely, possibility is that prices could head down from this level forming an ominous double-top. But the “fear readings” from the sentiment indicators don’t favor that line of thought.
For now, then, we will remain long while keeping an eye out for a reversal down, which could signal that profit-taking is about to drive prices to the bottom of the current bull channel at around S&P 1,035.
It is again time to be cautious. Traders should take any quick profits and await the next signal from the market. Don’t try to anticipate what it will do, since it will often take a fork in the road that is least traveled.
Today’s Trading Landscape
Earnings to be reported include: 3SBIO, A.D.A.M., AECOM, AFC Enterprises, Air Transport Services Group, Alliant Techsystems, Banco de Chile, BCE, Blockbuster, Brasil Foods S.A., Brooks Automation, China Automotive Systems, China TransInfo Technology Corp., Companhia Brasileira de Distribuicao, COPA Holdings S.A., Darling International, EF Johnson Technologies, EnCana Corp, ESCO Technologies, Gammon Gold, Global Sources Ltd., Hong Kong Highpower Technology, HSN, Interval Leisure Group, Kohl’s, Matthews International, Maximus, Meridian Bioscience, Microsemi, Nordstrom, OccuLogix, Pharmathene, Rand Logistics, Repsol YPF, RRSat Global Communications Network Ltd., Suburban Propane Partners, TAM S.A., Transcept Pharmaceuticals, Urban Outfitters, Wal-Mart and Zagg.
Economic reports due: MBA purchase applications, jobless claims (the consensus expects 512,000), EIA petroleum status report, Treasury budget (the consensus expects -$150 billion), Fed balance sheet and money supply.
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