Greeks in, Greeks out, no, Greeks in. Day after day, the focus has been on a small nation that has, for almost a year, kept Europe and the world in a state of economic uncertainty. Thursday was no different. In the morning, it was Greeks in and the market rallied. But by noon, it was Greeks out, and by the close, comments from the Italian premier boosted confidence that Greece would stay in the euro zone. The market rallied in the last hour but closed mixed, a clear reflection of Europe’s mess.
Here at home, initial jobless claims declined for the first time in three weeks, and orders for durable goods improved.
The Dow Jones Industrial Average ended the day at 12,530, up 34 points, the S&P 500 rose 2 points to 1,321, and the Nasdaq fell 11 points to close at 2,839. The NYSE traded 796 million shares and the Nasdaq crossed 487 million. Advancers on the NYSE were ahead of decliners by 1.4-to-1, and advancers were slightly ahead on the Nasdaq.
The Nasdaq shows a clear breakdown from the support line at 2,900. And it bounced from the support line at 2,775 on a shallow two-double-bottom. But, unlike the Dow and the S&P 500, it doesn’t seem to attract the buyers needed to make a firm attack on the resistance line at 2,900. Yesterday, it was held back by an underperforming technology sector (-0.9%).
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Some of the stocks holding the Nasdaq back are also represented in the Russell 2000. This index is a benchmark for small-cap stocks and is slightly more volatile than the Nasdaq.
The Russell 2000 had a very clear head-and-shoulders breakdown at 785, which gives a downside target of 724. But, unlike the Nasdaq, it along with the other major indices closed higher yesterday.
Its bounce from the 200-day moving average will most likely result in a rally from an oversold condition, which could result in a rally back to the neckline breakdown at 785. But it’s going to be tough going for the small caps with a couple of weeks of slugging it out to reach that level only to fail and slide to its eventual target of about 724.
Conclusion: The Nasdaq and Russell 2000 have bounced from an oversold market. And both could extend the bounce for several weeks. But dead cats only bounce so far — and after a week or so of acting alive both will most likely become dinner for the bears.
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
