Daily Market Outlook: Dow Needs a Push Over 18,000
Sam Collins<p><p>Sam Collins is InvestorPlace.com's Chief Technical Analyst. He has more than four decades of experience in Wall Street firms.</p></p><p><p>In addition to providing fundamental and technical analysis for InvestorPlace.com, he provides FREE daily market commentary each trading day via the <em>Daily Trader's Alert</em>. The <em>Daily Trader's Alert</em> contains his Daily Market Outlook PLUS a Trade of the Day.</p></p><p><p>Sam served as a regular army captain serving in West Germany during the Berlin Wall Crisis before joining Merrill Lynch as a futures broker. Since then, he has been a financial adviser, branch manager, regional manager and certified portfolio manager with national and regional securities firms. While he retired in October 2009, during his career, he received recognition and numerous awards.</p></p><p><p>Sam used technical analysis as a timing and selection technique with portfolios that he managed. He developed a specific technical analysis technique and timing system called the Collins Bollinger Reversal (CBR) that has received national recognition, and he has appeared on local and national TV as a financial commentator.</p></p><p><p>As an equity specialist and technician, he uses technical analysis as a selection technique along with fundamental analysis. As a value buyer, his goal is to find companies with outstanding management, unique products and strong financials that have not yet been driven to unreasonable prices. His CBR system helps him to screen vast amounts of data for stocks that meet those standards.</p></p>Sam is also a member of the NASD Board of Arbitrators.Stock Market Today
Stocks stuttered on Thursday as worries over falling oil prices and today’s jobs numbers kept buyers at bay. And continued concerns about the impact of the Brexit also led to selling in Europe.
Oil skidded 4.8% lower to $45.14 a barrel, following a report showing inventories fell less than expected, indicating lower demand. The energy sector lost 1%.
Investors also sold defensive assets like utilities, telecommunication stocks and high-dividend stocks, which had all been bid up in the wake of the Brexit. The day’s best-performing sector was consumer discretionary, up 0.4%.
Even though the Labor Department’s report of those filing for jobless benefits fell last week, job growth could again be low following last month’s disappointing gains. And the Federal Reserve’s June meeting minutes showed them split on raising of interest rates.
The U.S. dollar gained slightly against a basket of 16 currencies following the jobs data, and gold fell from a two-year high, closing down 0 .4% at $1360.10 an ounce.
At Thursday’s close, the Dow Jones Industrial Average was off 23 points at 17,896, the S&P 500 fell 2 points to 2,098, the Nasdaq rose 18 points to 4,877, and the Russell 2000 added 2 points at 1,150.
The NYSE Composite’s primary exchange traded over 878 million shares with total volume of 3.6 billion. The Nasdaq crossed 1.7 billion shares. On the Big Board, advancers were slightly ahead of decliners, and on the Nasdaq, advancers led by 1.3-to-1. Block trades on the NYSE declined to 4,962 from 5,160 on Wednesday.
At its high of the day, the Dow Jones Industrial Average was just 15 points shy of the resistance line at 18,000. The index’s trading range is now defined by the June low at 17,470 — where a buy signal was triggered by my proprietary internal indicator, the Collins-Bollinger Reversal (CBR) — and 18,000. In the middle of the range is the flat 50-day moving average at 17,747 and the support line at 17,800.
The Dow Jones Utility Average fell 1.8% on Thursday, but after a five-day run to new highs, it was due for a slight consolidation. MACD is extremely overbought but upside volume remains strong.
Conclusion
Fear has channeled stocks on the “Street of Dreams” since the February/March breakout, which ended at the current trading range of 17,470 to 18,000 on the Dow.
A strong jobs report today might encourage buyers to break the Dow over the 18,000 mark. However, a strong jobs number could also encourage the Fed to raise interest rates, and that thought might cause buyers to run for the hills.
No one told us this would be easy! Keep an eye on volume, technical lines and advance/decline numbers for clues to the market’s direction.
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.