A listless day of trading ended in a mild round of selling yesterday. It was the second day of losses for the Dow Industrials after a string of gains. The selling was attributed to falling energy stocks and a report of slightly lower existing home sales in February.
At the close, the DJIA was down 46 points to 13,125, the S&P 500 fell 3 to 1,403 and the Nasdaq gained a point to close at 3,075. The NYSE traded 726 million shares, and the Nasdaq crossed 408 million. Breadth on both exchanges was almost even, with as many advancers as decliners.
Yesterday’s meanderings led to modest losses in both the Dow Industrials and the S&P 500. But volume was very light, breadth even, and both indices still are above their first line of support. In other words — for now let’s not worry. The bull still is alive, just resting.
Technically, two strong positives dominated the post-market news yesterday: First, the Nasdaq closed higher and made another intraday high at 3,090.08. Second, and much more significant, was the 43-point gain in the Dow Jones Transportation Index. The index bounced from its 50-day moving average after a decline on the opening but then rallied from just before noon to the close, propped by a stream of steady buying. Note that the index is on a strong MACD buy signal.
Conclusion: A mild consolidation is needed before the major indices again move higher, and so the uptrend has temporarily stalled. Our internal indicators are falling back from extreme overbought numbers, and that’s healthy. And sentiment still is on the side of the bulls — I’ll report the AAII numbers tomorrow.
This week, I’ve focused on special situations that still appear to be good values despite the best run in stocks in many years. Our Trade of the Day — TransCanada Corp. (NYSE:TRP) — is an undervalued special situation that deserves a place in virtually every long-term portfolio.
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.
