Following two days of deep losses, stocks closed mixed yesterday with the Nasdaq rebounding from a technical support line. But the focus was still on Libya, and with no end in sight in the political crisis there, investors decided to wait it out. Initial jobless claims fell more than expected and durable goods rose more than expected. And sales of new homes hit the rocks last month, reversing the prior month’s gains.

Daily Stock Market News

Dow: -37 points at 12,069
S&P 500: -1 point at 1,306
Nasdaq: +15 points at 2,738

Volume and Breadth

NYSE: 1.2 billion shares traded; decliners ahead 1.7-to-1
Nasdaq: 612 million shares traded; decliners ahead 3.2-to-1

Futures and Related ETFs

April Crude Oil: -82 cents at $97.28 per barrel; Energy Select Sector SPDR (NYSE: XLE) -$1.10 at $76.72
April Gold: +$1.80 at $1,415.80 per ounce; PHLX Gold/Silver Sector Index (NASDAQ: XAU) -4.87 points at 208.43

What the Markets Are Saying

Stocks rebounded after two days of heavy selling, but volume declined and two of the three major indices (Dow Industrials and S&P 500) closed with losses. The Nasdaq managed to eke out a gain, but not before an intraday penetration of its 50-day moving average for the second day in a row.

The Nasdaq still appears to be the leading index as trading throughout yesterday in the Dow and the S&P 500 swung back and forth with it. I noted in yesterday’s Daily Market Outlook that following two nasty rounds of selling we might see a rebound. But all that we got yesterday was a half-hearted rally from the Nasdaq and more selling in the senior indices. The Nasdaq, like the other two major averages, has penetrated its near-term support line, and none of the three has yet managed to close above it. 

But the Nasdaq is still the major mover, and the key number to keep in mind is 2,675 — the 2010 peak. A close under it would establish a lower low and tell us that the six-month uptrend in the index has ended. I hope that we don’t see this occur, but our readers should write the number down and focus on it since a failure at that level could result in a broad and extended market decline. But here is the good news: A close above S&P 1,325 would neutralize this week’s decline.

Now a word to our readers: Some of you are new to the business of trading and apparently not aware that near-term market trends can change in hours. Yesterday’s Daily Market Outlook, which highlighted the change in the near-term direction, apparently gave a few of you quite a scare. Long-term investors need not be concerned with these relatively minor shifts in trend. In fact, they should use weakness to buy stocks and ETFs that they value for the long term. (For one ETF to buy, see the Trade of the Day.)

But if you trade, you had better get used to the swings of the market and have a game plan that includes stop-loss orders and exit strategies. If you don’t, you will have many more sleepless nights. And the next impulse of the newcomer is to try to make up for the losses by taking positions that are too large for his/her level of risk tolerance. 

Here are the most common trading mistakes recently published by TD Ameritrade: Trading without a plan, setting unrealistic expectations, cutting profits short and letting losers run, overtrading, improper position sizing, lack of diversification, trying to time tops and bottoms, and trading against the trend. 

Finally, to be a successful trader, you must replace emotion with discipline. Discipline is what I am attempting to teach our readers. And, be honest with yourself. As President Harry S. Truman said, “If you can’t stand the heat then get out of the kitchen.”

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.

If you have questions or comments for Sam Collins, please e-mail him at samailc@cox.net.