The stock market traditionally does little the day before an announcement from the Federal Reserve, and yesterday was no exception. Following some exceptionally volatile days, most traders welcomed the relief of a day that traded within just an 84-point range.
But that’s not to say that there wasn’t news. Warren Buffett hit the early headlines by announcing that his Berkshire Hathaway (BRKA) will acquire the 77.4% of Burlington Northern Santa Fe (BNI) that it doesn’t already own, and Stanley Works (SWK) said that it would buy Black & Decker (BDK) for stock.
Better-than-expected auto sales and factory goods helped the broad tape.
The jobs report is not due until Friday, but there was much talk about it yesterday. Analysts are expecting a decline of about 175,000 non-farm jobs in October, and that would reflect a slower rate of decline.
The greenback traded higher against the euro and lower against the yen.
At the close, the Dow Jones Industrial Average (DJI) was down 18 points to 9,772, the S&P 500 (SPX) gained 3 points to 1,045, and the Nasdaq (NASD) rose 8 points to 2,057.
The NYSE traded 1.4 billion shares with advancers over decliners by almost 2-to-1. The Nasdaq had advancers ahead of decliners by 8-to-5 on volume of 7 million shares.
December crude oil rose $1.47 to $79.60 a barrel, and the Energy Select Sector SPDR (XLE) closed at $56.32, up 72 cents.
December gold vaulted $30.90 to $1,084 an ounce, and the PHLX Gold/Silver Index (XAU) gained $10.09 to $168.34.
What the Markets Are Saying
Yesterday’s lackluster trading will do little to change the mind of either bull or bear. But the tenacity of the market to hold its current position in light of what initially looked like a full-scale correction does encourage the bulls.
On the face it looks like the S&P 500 has broken below its 50-day moving average of 1,053, but is holding above the bottom of its current support zone of 1,020 to 1,070.
Momentum is now more oversold than at any time this year except the market low in March. But some services are noting that, despite the oversold condition of the internal indicators, each of the major indices has broken below the trendline that began in March.
But that trendline was already pierced back in the June-July correction and bounced back with vigor after touching the 200-day moving averages.
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As noted yesterday, the focus of traders should not be on the trendlines or even the major moving averages, but on the Oct. 2 S&P close at 1,020, since it is both the support low of the current zone and the last low point of the intermediate trendline.
A break of 1,020 would almost certainly drive the S&P 500 deep into its next support zone at 980 to 1,010 and put the entire bull market on hold.
Since March, it has been better to be “long than wrong,” and I see no reason to change that stance now. Buy into this decline but focus on a close below 1,020 as a stop-loss point for traders.
Today’s Trading Landscape
Earnings to be reported include:
99 Cents Only
Adept Technology, Agrium, Almost Family, Alnylam Pharmaceuticals, Alon USA Energy, Alvarion, Ambac Financial Group, Amdocs Ltd., AmerCo., American Equity Investment Life Holding Co., American Medical Systems, American States Water, American Vanguard, Ameristar Casinos, Andersons, Answers Corp., Aqua America, Arch Chemicals, Ashford Hospitality Trust
Babcock & Brown Air Ltd., Baker Hughes, Becton, Dickinson & Co., Bowne & Co., Bridgepoint Education, Brightpoint, Bristow Group
Calumet Specialty Products, Capital Senior Living, Caplease, Career Education, Caribou Coffee Co., Checkpoint Systems, Cincinnati Bell, Cisco Systems, Clean Harbors, Cogo Group, ConseCo, Consolidated Graphics, Corrections Corp of America, Cousins Properties
DealerTrack Holdings, Devon Energy Corp., Dyncorp International
Eagle Bulk Shipping, Eagle Rock Energy Partners LP, Ebix, Echelon Corp., Edgewater Technology, El Paso Pipeline Partners LP, Employers Holdings, EnergySolutions, Entertainment Properties Trust, Equity One, Evergreen Solar
Federal Realty Investment Trust, FGX International, FICO, First Industrial Realty Trust, Foster Wheeler AG, FPIC Insurance Group, FTI Consulting
Garmin Ltd., Genomic Health, Georgia Gulf, Given Imaging Ltd., Gladstone Commercial Corp., Global Cash Access, Global Industries, Globecomm Systems, GMAC, GoldCorp, Goodrich Petroleum, Government Properties Income Trust
Haverty Furniture, Headwaters, Health Care REIT, Health Fitness, Healthsouth, Henry Schein, Hersha Hospitality Trust, Hill International
Iamgold Corp., Inland Real Estate Corp., Insight Enterprises, Integrys Energy Group, International Flavors & Fragrances, Interoil Corp., Interstate Hotels & Resorts, Ion Geophysical Corp.
JMP Group
KapStone Paper and Packaging Corp., Kendle
Legacy Reserves LP, Linn Energy LLC, Liz Claiborne, LoJack, Lumber Liquidators
Marsh & McLennan Companies, Martha Stewart Living Omnimedia, Martin Midstream Partners, Max Capital Group Ltd., McCormick & Schmick’s Seafood Restaurants, MCG Capital Corp., Medicis, MFA Financial, Microchip Technology, Molson Coors Brewing Co., Multi Fineline Electronix, Murphy Oil Corp.
Nacco Industries, Natural Resource Partners LP
ON Semiconductor Corp., Ormat Technologies
Penn Virginia, Penn Virginia GP Holdings LP, Penn Virginia Resources, Plains All American Pipeline, Polypore International, Primus Guaranty Ltd., Protective Life Corp., Providence Service Corp., Prudential Financial, Pulte Homes
Qualcomm, Quanta Services
Radian Group, Red Lion Hotels Corp., RR Donnelley, Rubios Restaurants
Sangamo Biosciences, Sanmina-SCI Corp., Service Corp. International, Sinclair Broadcast Group, Smith Micro Software, Sovran Self Storage, Speedway Motorsports, Sport Supply Group, SRA International, Statoil ASA, Sunstone Hotel Investors, SurModics, Susser Holdings Corp., Synta Pharmaceuticals Corp.
T-3 Energy Services, Targa Resources Partners LP, Tekelec, Ternium SA, Textainer Group Holdings Ltd., The Allstate Corp., Thoratec Corp., THQ, TICC Capital Corp., Time Warner, Total, TransCanada Corp., Transocean Ltd., Trico Marine Services, TRW Auto, TTM Technologies, Tyco Electronics
United Online
Vanguard Natural Resources LLC, Varian
Watson Pharmaceuticals, WellCare Health Plans, Whole Foods Market, Willbros Group, WNS Holdings Ltd.
XTO Energy
Zebra Technologies
Economic reports due: MBA purchase applications, ADP employment report, ISM non-manufacturing index (the consensus expects 51.6), EIA petroleum status report and FOMC meeting announcement (the consensus expects 0-0.25%).
Late news: Automatic Data Processing (ADP) reported Q1 EPS of 56 cents versus a 50-cent estimate. China’s growth prospects have been revised higher by the World Bank.
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