After an encouraging start, which took the Dow industrials up over 55 points by 11 a.m. yesterday, stocks sagged, and by noon the index was 40 points in the red. That turned out to be the extent of the trading range for the day. A lid on further gains resulted from new highs in crude oil at over $102 per barrel and an admission from the Fed in its Beige Book report that the economy was experiencing a “slow recovery,” and also that “rising commodity prices” were a concern.

Daily Stock Market News

Dow: +9 points at 12,067
S&P 500: +2 points at 1,308
Nasdaq: +11 points at 2,748

Volume and Breadth

NYSE: 1 billion shares traded; advancers ahead 1.7-to-1
Nasdaq: 548 million shares traded; advancers ahead 1.3-to-1

Futures and Related ETFs

April Crude Oil: +$2.60 at $102.23 per barrel; Energy Select Sector SPDR (NYSE: XLE) +44 cents at $77.51
April Gold: +$3.80 at $1,435 per ounce; PHLX Gold/Silver Sector Index (NASDAQ: XAU) +0.03 points at 217.29

What the Markets Are Saying

After the triple-digit down day on Tuesday, it would be expected that the bulls could achieve more than just a 9-point recovery with volume at just over 1 billion shares. But the good news is that the mild advance within a narrow trading range achieved the goal of maintaining neutrality for the near-term trend for each of the major indices as they closed between the confines of their respective 20- and 50-day moving averages.

Yesterday’s lagging volume failed to provide a clue as to the future near-term direction of the market. But something is bound to break soon, since the 50-day moving average is rapidly closing the gap between it and each index’s closing price. For example, on Tuesday, the gap for the Dow was 143 points, but after yesterday’s action, it had narrowed to 130 points. And the Nasdaq’s spread is even more critical, since the lows for the past two days have penetrated its 50-day moving average, and yesterday, the Nasdaq closed just 14 points above that important line.

Meanwhile, each of our internal indicators is drifting lower and even entering oversold territory. That’s favorable as long as the drift is reversed by a rally. But if the 50-day moving averages are penetrated, look for an extended period of listless trading within a confined trading range. 

As for our sentiment indicators, the Investors Intelligence (II) Advisors Sentiment Index showed a shift to fewer bulls with a drop from 53.3% to 50.6%. That is the fewest number of bulls since early November, and the spread between bulls and bears contracted to 31.1% from 34.4% a week ago — they are both moving in the right direction. I haven’t received the latest American Association of Individual Investors (AAII) numbers, but last week’s numbers indicated a drop in the number of bulls to 36.63% from 46.58% and that, too, is more bullish and falls in line with the II numbers.

Conclusion: The stock market is near-term “neutral,” and we must wait until the future trend is revealed before jumping on either side of the market. Meanwhile, take a look at our newly published Top 6 Stocks for March since a renewed round of buying should add to your gains for this year.

And for a stock to sell now, see the Trade of the Day.

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.

If you have questions or comments for Sam Collins, please e-mail him at samailc@cox.net.