Again it was the financials that led the market out of a flat trading session yesterday, and drove stocks modestly higher. Comments from Citigroup’s (C) CEO Vikram Pandit were the trigger for the move when he forecasted a growth in assets for the big bank this year, and he said he wouldn’t be surprised if the government is thinking of selling their Citigroup shares this year.
China seems to be on everyone’s mind following its recent restrictive monetary policies. Now data confirms that prices for February spiked sharply and that an even tighter monetary policy may be required in order to keep inflation under control.
The number of U.S. workers applying for jobless benefits rose by 2,000 last week, and continuing claims totaled 4.56 million, when 4.5 million was expected. The Commerce Department said that the U.S. trade deficit decreased 6.6%, which was a greater decline than expected.
At the close, the Dow Jones Industrial Average (DJI) gained 45 points to 10,612, the S&P 500 (SPX) rose 5 points to 1,150, and the Nasdaq (NASD) gained 10 points to 2,368.
The NYSE traded 983 million shares with advancers ahead of decliners by 11-to-7. The Nasdaq crossed 604 million shares and advancers led by 5-to-4.
April crude oil rose 2 cents to $82.11 a barrel, and the Energy Select Sector SPDR (XLE) fell 10 cents to $58.47.
Gold for April delivery rose 10 cents to $1,108.20, and the PHLX Gold/Silver Sector Index (XAU) gained 1.4 points to 167.24.
What the Markets Are Saying
Even though the S&P 500 is within a fraction of a new high, neither the Dow Industrials nor the NYSE Composite is within immediate striking distance of a new high. And instead of the market attracting heavy volume in preparation for a breakout, the NYSE again traded at the lowest average range of volume in 18 months. Breadth, which was strongly positive last week, has deteriorated to barely on the plus side.
Trading a market like this can be a testy affair, so it’s probably best to stay out until the market itself telegraphs its next move. And, at this heady price level, that message should be coming soon.
A breakout should be accompanied by higher-than-average volume, which would confirm that there is considerable optimism that the markets are heading higher.
In the absence of heavy volume, the Dow could double-top and head back down to the initial support line represented by the 20- and 50-day moving averages at 10,380 to 10,390. And if that zone fails to hold, the next support is at the Feb. 5 reversal day low of 9,823.
The market is finally at a point where it must reveal its next move. We have to watch and wait, and not try to anticipate the move, since what could initially appear to be a buy or sell signal could quickly reverse to the opposite side of the ledger.
It is almost as though the market is trying to mislead the vast majority of investors and only reward those with the most patience.
Today’s Trading Landscape
Earnings to be reported before the opening include: Ann Taylor, Citi Trends, Hibbett Sporting, Kirkland’s, Novavax and Pennsylvania Real Estate Investment Trust.
Economic reports due: retail sales (the consensus expects -0.2%, ex-autos 0%), consumer sentiment (the consensus expects 74), and business inventories (the consensus expects 0.2%).
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