Nasdaq Charting Its Own Course

Stocks rallied again Tuesday, led by the energy sector, which was boosted by higher oil prices.

The increase in crude was due to concerns about supply disruptions in Libya and Brazil. Additionally, flooding in Texas impacted operations at the largest U.S. refined-fuel pipeline, which caused a jump in gasoline and diesel prices. Oil finished up 3.8% at $47.90 a barrel, while gasoline futures rose 5.1% to $1.4455 a gallon.

The Dow Jones Industrial Average closed 0.5% higher, buoyed by Exxon Mobil Corporation (XOM) and Chevron Corporation (CVX), up 1.8% and 3.4%, respectively.

All sectors of the S&P 500 were up except consumer staples and health care.

Consumer staples were down 0.5%, as Kellogg Company (K) fell 3.6% and Archer Daniels Midland Company (ADM) lost 6.8% after the companies missed quarterly earnings estimates. ADM also reported a shortfall in revenues.

Health care stocks fell 0.4% even though iShares NASDAQ Biotechnology Index (ETF) (IBB) gained 0.3%.

Transports lagged again, off 0.4%, while utilities rose 0.3%.

The euro fell 0.5% against the U.S. dollar to $1.0965. Gold was down 1.9% to $1,114.20 an ounce. And the yield on the 10-year Treasury note rose to 2.23% from 2.20% on Monday.

At Tuesday’s close, the Dow Jones Industrial Average rose 89 points to 17,918, the S&P 500 was up 6 points at 2,110, the Nasdaq advanced 18 points to 5,145, and the Russell 2000 gained 5 points at 1,192.

The NYSE Composite’s primary exchange traded over 900 million shares with total volume of 4.3 billion. The Nasdaq crossed over 2 billion shares. On the Big Board, advancers outpaced decliners by 1.4-to-1, and on the Nasdaq, advancers led by 1.5-to-1.

Nasdaq Chart
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Chart Key

The Nasdaq appears to have enough momentum to break above the June peak at 5,164. Support on a pullback rests at the bottom of the open gap at 4,927 to 5,000 and the 200-day moving average at 4,941. Volume is still on the light side and MACD is overbought.


Despite other sluggish indices (Dow transports and industrials, NYSE Composite, Russell 2000), the Nasdaq has been charting its own course.

While it is likely to stall shy of its all-time highs made in July at 5,219 (close) to 5,232 (intraday), it is also possible the index will achieve what seemed impossible in early October and obliterate them.

When any index or stock becomes this overbought, it is more likely it will form a line of consolidation, and that is what I would expect. However, since October, there is no doubt the Nasdaq has exceeded my expectations.

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.

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