This Market is Too Close to Call

The S&P 500's daily and monthly charts look very different

On Wednesday, investors’ concern over the upcoming employment report on Friday and lower crude oil prices led to selling. Trading volume and volatility have fallen to record lows, and this has caused many investors to stall further buying.

The Energy Information Administration reported a larger-than-expected oil stockpiles, which caused crude prices to fall 3.6% to $44.70 a barrel.

Airline stocks fell Wednesday, dragging the Dow Jones Transportation Average down 0.4%. The U.S. Global Jets ETF (NYSEARCA:JETS) declined 0.7%. And the industrial sector fell 0.6%, led lower by Dow component Boeing Co (NYSE:BA), off 1%.

At Wednesday’s close, the Dow Jones Industrial Average fell 53 points to 18,401, the S&P 500 was off 5 points at 2,171, the Nasdaq declined 10 points to 5,213, and the Russell 2000 was down 6 points at 1,240.

The NYSE Composite’s primary exchange traded 661 million shares with total volume of 3.6 billion. The Nasdaq crossed 1.7 billion shares. On the Big Board, decliners outpaced advancers by 1.6-to-1, and on the Nasdaq, decliners led by 1.7-to-1. Block trades rose to 5,827 from 4,750 on Tuesday.

S&P 500 17-Month MA Chart
Click to Enlarge

The 17-month moving average of the S&P 500 not only held its own in August, but held onto the highs made in July. Although the index closed slightly lower in August, it made new inter-month highs and, thus, continued the string of advances to five months.

S&P 500 Chart
Click to Enlarge


The daily chart doesn’t look anything like the monthly chart. The last day of August saw the index slip under the inflection point at 2,171.25 by a mere 0.3 points. Volume advanced but was still below average, and MACD is now clearly oversold.


It’s too close to call. As noted in prior Daily Market Outlooks, the small and mid caps are still in the lead, and that is healthy. However, I expect to see some profit-taking in precious metals, and energy stocks will have to consolidate until crude oil’s oversupply is worked off.

Banks and other financials seem to be anticipating a hike in rates. As a sector, they are attracting more upside volume than others soon (see my Trade of Day). Traders seem to be awaiting Friday’s employment report… or not.

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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