Blue chips were again the center of buyers’ attention yesterday. The problem was, however, that the attention wasn’t very strong as evidenced by the lowest volume of the year on the NYSE. The low volume was caused by a lack of news of any kind to attract either buyers or sellers, and so the range on the Dow industrials was less than 40 points.

Daily Stock Market News

Dow: +23 points at 12,400
S&P 500: Flat at 1,333
Nasdaq: Flat at 2,790

Volume and Breadth

NYSE: 769 million shares traded; advancers ahead 1.2-to-1
Nasdaq: 447 million shares traded; advancers ahead 1.1-to-1

Futures and Related ETFs

May Crude Oil: +53 cents at $108.47 per barrel; Energy Select Sector SPDR (NYSE: XLE) +5 cents at $80.04

April Gold: +$4.10 at $1,432.70 per ounce; PHLX Gold/Silver Sector Index (NASDAQ: XAU) +0.96 points at 215.89

What the Markets Are Saying

Many bears argue that stocks have moved higher on news headlines and purchases resulting from QE2 as opposed to a more genuine advance on basic economic strength. They contend that a bull market should rise not on news but on momentum geared to a fundamentally strong earnings future. Yesterday’s flat, low-volume session would tend to support that notion.

But the bulls retort that there was some very bad news following the low of March 16 — the bottom of the “V” — and yet stocks rallied in the face of it, which is a very strong indicator. There is some logic to that argument as well.

Verdict: stalemate.

It is in times like these that we go to the charts and the technical studies that have historical value in determining both current and future trends. One of these is the theory of confirmation. Briefly, it holds that healthy markets will tend to “confirm” each other by the means of group or index rotation. We don’t always expect all sectors, groups and indices to move the same each day, but over a relatively short period of time they should be moving in the same direction.

For that reason, some technicians have focused on the Dow Jones Industrial Average versus the Dow Jones Transportation Average. The transports popped above their prior high close of Feb. 18 at 5,297.20 on Friday by jumping to 5,370.47, while the industrials failed to make a new high running only to 12,376.72 on Friday versus their prior closing high of 12,391.25. But yesterday, despite flat trading, the Dow managed to confirm its major uptrend by ending the day at its highest close since June 2008. So far, so good for a limited number of stocks.

But what of the broad-based indices like the S&P 500, the NYSE Composite and the Russell 3000?

Not one of the broad-based indices has reached either the intraday high or closing high of Feb. 18. This indicates that institutional buying has been focused on the Dow stocks — the traditional “store of value” for institutional buyers — while staying away from the more mid- and small-cap stocks and traditional growth stocks. A non-confirmation exists between the specialized and limited size indices of the Dow versus the broad-based indices that represent the stock market as a whole. Thus, the resumption of the bull market has not yet been confirmed.

Tomorrow, we’ll consider another confirmation study that has high validity, as well as how our own internal indicators contribute to the determination of the overall trend.

For one ETF to buy 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.