Stocks ended slightly lower Tuesday following one of the lightest-volume days of the year. The Dow Jones Industrial Average fell 0.3%, while the S&P 500 and Nasdaq slipped 0.2%.
Apple Inc. (NASDAQ:AAPL) started the day on a sour note after news that the European Commission wanted Ireland to collect $14.5 billion in unpaid taxes from the company. It said the tech giant had received illegal tax benefits, which produced no taxes on its European business. The decision is being appealed by Apple, as well as the Irish and U.S. governments. AAPL fell 0.8% on the day.
An article in The Wall Street Journal called this the “quietest stock market in decades,” citing that the S&P 500 has moved less than 0.8% between its daily high and low for the past 17 trading days through last Thursday.
One area that is seeing some action recently, though, is the financials. On Tuesday, the FDIC said a key threshold had been surpassed in the federal fund that protects consumers’ U.S. bank deposits. This means smaller banks will now have to pay less of a premium. (See my Trade of the Day for a way to play this positive for small-cap banks.)
Pharmaceuticals continued to underperform. Notable decliners included Bristol-Myers Squibb Co (NYSE:BMY), off 2.6%, and Abbott Laboratories (NYSE:ABT), off 1%.
At Tuesday’s close, the Dow Jones Industrial Average fell 49 points to 18,454, the S&P 500 declined 4 points to 2,176, the Nasdaq was down 9 points at 5,223, and the Russell 2000 was up a point at 1,246.
The NYSE Composite’s primary exchange traded 660 million shares with total volume of 2.6 billion. The Nasdaq crossed 1.4 billion shares. Advancers outpaced decliners by 2.7-to-1 on the Big Board and by 1.7-to-1 on the Nasdaq. Block trades on the NYSE fell to 5,465 from 5,983 on Friday.
While many traders are focused on the near-term channels of the major indices, the underlying facts are more bullish. We see a bullish “W” forming in the broad-based NYSE Composite. This important index is composed of all stocks traded on the NYSE, so it represents a broad cross-section of the market.
Like the NYSE Composite, the iShares Russell 2000 Index (ETF) (NYSEARCA:IWM) is in a broader bull channel. IWM also just flashed a special situation buy signal from my proprietary internal indicator, the Collins-Bollinger Reversal (CBR).
First support for both indices is at the 50-day moving average, and then a line drawn through the April highs to the November/December highs. A penetration of those support lines would be a real game changer.
It seems investors are waiting for the monthly jobs report, which is scheduled to be released on Friday. But it must be obvious to all by now that the Federal Reserve isn’t going to act prior to the presidential election.
Halloween is coming, and following that I’m looking for a bull rush to year-end that will happen regardless of who wins the White House.
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.