Energy stocks gained yesterday following better-than-expected earnings from BP PLC (BP). And IBM (IBM) led the techs and the Dow Jones Industrial Average (DJI) after announcing a $5 billion stock repurchase plan. But aside from that there was little to move the markets, and despite the overweighting of tech stocks in the Nasdaq (NASD), the “junior index” fell 1.2%.

Consumer discretionary stocks took a beating following a disappointing Consumer Confidence Index reading. The group fell 1.7%, with JCPenney (JCP) falling 4.13% and Macy’s (M) down 1.35%.

And throughout the day, the long-term Treasury futures were strong as investors sought safety instead of risk. The 10-year note gained 28/32 to yield 3.454% as the U.S. dollar gained ground for the third day in a row.

At the close, the Dow was up 14 points to 9,882, the S&P 500 (SPX) fell 4 points to 1,063, and the Nasdaq lost 26 points to 2,116. 

The Big Board traded 1.4 billion shares for the second consecutive day, and decliners were ahead of advancers by almost 2-to-1. The Nasdaq traded 786 million shares and it, too, had decliners ahead by 2-to-1.

December crude oil rose 87 cents to $79.55, and the Energy Select Sector SPDR (XLE) gained 51 cents to $57.85. 

December gold fell $7.40, closing at $1,035.40, as a stronger dollar put new pressure on gold. The PHLX Gold/Silver Index (XAU) fell $2.24 to $163.23.

What the Markets Are Saying

After seven months of one of the strongest rallies in history, the stock market is showing signs of aging. Yesterday we looked at the weakening Relative Strength Index (RSI) and momentum indicators, which show that the fuel needed to make new highs is becoming depleted. Today we note some extreme weakness in one of the key indices, the Nasdaq.

From March to Oct. 23, the Nasdaq has run from 1,265 to 2,190 for a 73% gain. But in the past four weeks the Nasdaq has recorded one major reversal (on Sept. 23) and two minor reversals (Oct. 21 and Oct. 23).  

And yesterday, despite major news from IBM, the tech-heavy index fell through its intermediate support line as well as the long-term bullish support lines connecting the March 9, July 8 and Oct. 2 lows. 

Despite the ominous overtones of the breaking of Nasdaq’s important bullish support line, there is still little evidence that a major sell-off is in the wings since there are at least two major support zones that exist below the current price.

So, like yesterday, I support the view that the advance will shift gears, and instead of recording a new high every month, the trends will tend to flatten.

Support will most likely hold at Dow 9,380, S&P 1,020 and Nasdaq 1,930 to 2,015. But as we head into the heart of the fourth quarter, I wouldn’t look for any more new highs this year.

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Today’s Trading Landscape

Earnings to be reported include:

Acxiom Corp., Advance America Cash Advance Centers, Advanced Analogic Technologies, Advanced Energy Industries, Advantest Corp., Affiliated Managers Group, Aflac, Agnico-Eagle Mines Ltd., Akamai Technologies, Alliance HealthCare Services, Alliance Holdings GP L.P., Alliance Resource Partners L.P., American Commercial Lines, American Safety Insurance Holdings Ltd., Amerigon, Amicus Therapeutics, Annaly Capital Management, ArcelorMittal SA, Ariba, Arrow Electronics, Ashland, Asiainfo Holdings, Aspen Insurance Holdings Ltd., Assurant, ATS Medical, Auxilium Pharmaceuticals, AvalonBay Communities, Avista Corp.
Banco Santander S.A., Basic Energy Services, Belden, Berry Petroleum Co., BG Group PLC, BioMarin Pharmaceutical, Blackbaud, BOK Financial Corp., BorgWarner, Boston Private Financial Holdings, Brandywine Realty Trust
Cabot Corp., CACI International, Cadence Design Systems, Cal Dive International, California Water Service Group, Cardica, Cardtronics, CB Richard Ellis Group, Celadon Group, Celera Corp., CenterPoint Energy, Cepheid, Cerner Corp., CEVA, China Security & Surveillance Tech, Churchill Downs, Circor International, Coca-Cola Enterprises, Community Health Systems, CommVault Systems, Compellent Technologies, Complete Production Services, ConocoPhillips, Corporate Office Properties Trust, Cytokinetics
Dentsply International, Dun & Bradsteet Corp., Duncan Energy Partners L.P.
EastGroup Properties, Electronics for Imaging, Encore Capital Group, Encor Energy Partners L.P., Equity Residential, Euronet Worldwide, Evercore Partners, Everest Re Group Ltd., Express Scripts
FalconStor Software, First Community BancShares, First Financial Bancorp, First Solar, Flowserve Corp., FMC Corp., Fomento Economico Mexicano, Forrester Research.
Genco Shipping & Trading Ltd., General Dynamics Corp., GlaxoSmithKline PLC, Goodyear Tire & Rubber Co., Granite Construction, Grupo Aeroportuario del Pac, GSI Commerce, Guess, GulfMark Offshore
Hanesbrands, Harleysville Group, Harmonic, Hartford Financial Services Group, Health Grades, Helix Energy Solutions Group, Hercules Offshore, Hess Corp., Horace Mann Educators Corp.
InfoSpace, InterDigital, Interface, International Coal Group, International Paper Co., Internet Brands, Interpublic Group of Companies, ITC Holdings Corp., Itron, Ixia
Jarden Corp., Jones Apparel Group
K-Sea Transportation Partners L.P., Kaiser Aluminum Corp., Kirby Corp.
L-1 Identity Solutions, LasVegas Sands Corp., Lazard Ltd., Level 3 Communications, LHC Group, Lincoln National Corp., LogMeIn, LoopNet, LSI Corp.
ManTech International Corp., MarketAxess Holdings, MasTec, MCG Capital Corp., MeadWestvaco Corp., MedAssets, Medicines Co., Mercer International, Mips Tech, Molina Healthcare
Nelnet, New York Community Bancorp, Newell Rubbermaid, Newport Corp., Nexen, NICE Systems Ltd., NightHawk Radiology Holdings, Novozymes A/S
O’Reilly Automotive, Oceaneering International, Odfjell ASA, Odyssey HealthCare, Online Resources Corp., Owens Corning, Owens-Illinois
PepsiAmericas, Plexus Corp., PolyOne Corp., Pozen, Praxair, PSS World Medical, Public Service Enterprise Group
Questar Corp.
Realty Income Corp., RPC, RTI Biologics, Ryland Group
SAP AG, Savvis, Sealed Air Corp., Selective Insurance Group, ShoreTel, Shutterfly, Sierra Wireless, Silicon Laboratories, Siliconware Precision Industries, Southern Co., Spectranetics Corp., Spherion Corp., SPX Corp., StellarOne Corp., Sun Healthcare Group, Superior Energy Services, SurModics, Susquehanna BancShares, Symantec Corp.
Taleo Corp., Tech Corp., Teck Resources Ltd., Teekay Corp., Teekay LNG Partners L.P., Teekay Offshore Partners L.P., Teletech Holdings, TeliaSonera AB, Teppco Partners L.P., Teradyne, Thomas Weisel Partners Group, TomoTherapy, Torchmark Corp., TransAtlantic Holdings, TranSwitch Corp., Trinity Industries, Tyler Technologies.
UniFirst Corp., UniSource Energy Corp., United Microelectronics Corp., United Rentals, Universal American Corp.
Vale S.A., Varian, ViroPharma, Vivus
Wabco Holdings, Westfield Financial, Whiting Petroleum Corp., Wipro Ltd., Wright Express Corp., Wyndham Worldwide Corp.
XL Capital Ltd.
Zarlink Semiconductor

Economic reports due: mortgage applications, durable goods (the consensus expects 1.5%), new home sales (the consensus expects 440,000), and U.S. Energy Department oil inventories.

Late news: Qwest Communications International Inc. (Q) reported Q3 earnings of 8 cents versus a 7-cent estimate. International Paper (IP) reported 37 cents (ex-items) versus a 24-cent estimate. Interpublic Group of Companies (IPG) reported 3 cents versus a 1-cent estimate. WellPoint Inc. (WLP) reported a $1.53 versus a $1.37 estimate. Southern Co. (SO) reported 99 cents versus a 98-cent estimate.  

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