Stocks were mixed Tuesday as economic crosscurrents tended to offset each other. The August Consumer Confidence Report was the lowest in nine months, but it was countered by the results of the June Case-Shiller Home Price Index, which was much better than expected.
And as market watchers anticipated the end-of-the-week meeting of central bankers in Jackson Hole, Wyo., Mario Draghi announced that he was too busy to attend, which raised many eyebrows as to the real purpose of his cancellation. Federal Reserve Chairman Ben Bernanke’s speech is expected to address any new measures that the Fed may take to stimulate the economy.
At Tuesday’s close, the Dow Jones Industrial Average was off 22 points at 13,103, the S&P 500 fell 1 point to 1,409, and the Nasdaq rose 4 points to 3,077. The NYSE traded 516 million shares and the Nasdaq crossed 328 million. Advancers were ahead of decliners on the NYSE by 1.3-to-1 and by 1.4-to-1 on the Nasdaq.
Despite the expectation of Fed action later this week, the S&P 500 treated Tuesday like any other day in the week prior to a Labor Day holiday. Last week’s negative short-term characteristics — the failure to close at a new high and a MACD sell signal — remain to hold back the bulls.
The first support is Thursday’s low and the 20-day moving average, both at about 1,400. But the next major support is 27 points lower at the 50-day moving average at 1,373.
Like the S&P 500, the Dow failed to make a new high, but did it with more gusto with a “key reversal day” on Aug. 21. The first support for the Dow is at Thursday’s turnaround at 13,050. But more important support rests at its 50-day moving average at 12,913. The Dow’s MACD flashed a sell signal on Thursday.
Further, the Dow transports lost ground Tuesday, falling 45 points and penetrating all three of its major moving averages. Thus, a serious Dow non-confirmation remains.
Conclusion: Despite the hope for better news, the overall chart patterns remain bearish for the near term and possibly also for the intermediate term. Even if Bernanke delivers a much-anticipated QE3, it is unlikely to cause much more than a temporary rally.
Don’t expect much from September — it has historically been a disappointment more than any other month. Look to Halloween for better news.
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.
