On Monday, stocks had a modest decline — the impact of President Donald Trump’s first day at the office. A lack of specificity appeared to worry those familiar with the president’s shake up of trade, taxes and over-regulation.
But an early morning meeting with key corporate CEOs and later a frank, but apparently acceptable, chat with union leaders settled down what could have been a more emotional day on The Street of Dreams. In the meeting with CEOs, he said the U.S. would impose a “very major” border tax on companies that move operations out of the U.S. but would cut taxes “massively: for the middle class and reduce corporate regulations by a minimum of 75%.”
At the close the Dow Jones Industrial Average fell a mere 0.1%, the S&P 500 lost 0.3%, and the Nasdaq fell 0.04%.
Crude oil (WTI) fell 0.9% to $52.75 per barrel, and the energy sector of the 500 fell 1.1%. Halliburton Company (NYSE:HAL) lost 3% following a “miss” in revenue estimates. But crude oil’s decline was blamed on the White House spokesman’s assurance that the Keystone XL pipeline is on the schedule to be approved by the president.
The biggest loss in the S&P 500 had nothing to do with oil: Qualcomm, Inc. (NASDAQ:QCOM) fell 13% after Apple Inc. (NASDAQ:AAPL) filed a suit alleging that Qualcomm demanded “unfair terms” for its technology. Qualcomm denied the claims which their general counsel said were “baseless.”
At the close, the Dow Jones Industrial Average was off 27 points at 19,800, the S&P 500 was down 6 points to 2,265, the Nasdaq fell 2 at 5,553, and the Russell 2000 closed at 1,348 for a loss of 4 points. The NYSE’s primary exchange traded 754 million shares with total volume of 3.1 billion shares. The Nasdaq crossed 1.6 billion shares. On the Big Board, advancers outpaced decliners by 1.2-to-1, and on the Nasdaq decliners led by 1.4-to-1.
Yesterday the iShares Russell 2000 Index (ETF) (NYSEARCA:IWM) violated its 50-day moving average at $133.91 and the November closing high at $134.10. But for this to become a major divergence, the IWM must pull more downside volume, and the violation, in my opinion, must be greater than 1% instead a mere fraction of a point.
Conclusion: Despite a miniscule “breakdown,” the IWM deserves more-than-average attention, having led the other indices for most of last year. And perhaps its over-extension is the reason why its consolidation is more pronounced than the other indices. However, when compared to the SPDR S&P MidCap 400 ETF (NYSEARCA:MDY), not shown, the November high there is at $298.69 and it closed at $303.81, a full 5-plus points from concern and more than 3 points above its 50-day moving average at $300.52.
More technical evidence is needed to assume a bearish posture. Be a happy bull, unless the evidence changes.
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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