On Tuesday, small- and mid-cap stocks rose to new highs while big caps lagged with the Dow Jones Industrial Average and S&P 500 posting small gains.
European stocks advanced as it appeared that a recent proposal from the Greek government would be accepted by its European partners. The euro fell 1.4% against the dollar to $1.1188, which some saw as disconcerting. However, analysts attributed the euro’s fall to selling by speculators who now view other currencies as a better short-term bet. The Stoxx Europe 600 rose 1.2%, Greece’s Athex Composite gained 6.1% and Germany’s DAX was up 0.7%.
In the United States, technology stocks fought back from early losses and managed to close slightly higher. However, chip makers lost ground, and the PHLX Semiconductor (SOX) lost 0.6%.
The Energy Select Sector SPDR (ETF) (XLE) rose 0.3% as crude oil gained 1% closing at $61.01 a barrel. Gold fell 0.6% to $1,176.60 an ounce.
At Tuesday’s close, the Dow Jones Industrial Average was up 24 points at 18,144, the S&P 500 gained a point at 2,124, the Nasdaq rose 6 points to 5,160, and the Russell 2000 added 3 points at 1,296.
The NYSE’s primary market traded 690 million shares with total volume of 3 billion. The Nasdaq crossed 1.6 billion shares. On the Big Board, advancers outpaced decliners by 1.4-to-1, and on the Nasdaq, advancers led by 1.3-to-1.
The SPDR S&P MidCap 400 ETF (MDY) graphically illustrates the problem of the major indices. Volume, both positive and negative, is in decline, indicating a lack of public interest in stocks, even as the ETF is attempting to punch to new highs.
Multiple bands of support should protect investors up to a sell-off of about 3% to the $272 area.
Comparing the charts of MDY and iShares Russell 2000 Index (ETF) (IWM), note that while the support bands are similar in level and depth, IWM has a steady flow of positive volume. It is this volume that has driven the ETF to new highs while the S&P 500 struggles to maintain support.
Investors are clearly supporting mid and small caps at the expense of the big boys. If the market is to continue its advance, the big caps will have to catch up. And that is where the real bargains lie. Thus, for the next week or so, I’ll be reviewing some larger, well-known stocks that appear to be good values at current prices in the Trade of the Day.
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.