Stock purchases were not on the minds of investors yesterday as a low-volume session ground to a flat close. Some blamed the malaise on the expiration of the Q4 earnings season and a renewed emphasis on economic news. Others said that the foreign economic situation gave pause to traders.
Futures were strong with gains in gold and oil as the inverse relationship between the U.S. dollar and commodities again asserted itself. Natural resource and materials stocks were higher, and technology and financial stocks closed lower.
Key economic reports will be issued late this week with a focus on the jobs numbers due on Friday.
At the close, the Dow Jones Industrial Average (DJI) was up 2 points to 10,406, the S&P 500 (SPX) gained 3 points to 1,118, and the Nasdaq (NASD) rose 7 points to 2,281.
The NYSE traded just over 1 billion shares with advancers ahead of decliners by over 2-to-1. On the Nasdaq, 769 million shares traded also with advancers ahead by over 2-to-1.
April crude oil closed at $79.68 a barrel, and the Energy Select Sector SPDR (XLE) closed at $57.13, up 47 cents.
Gold (March contract) surged to a new 18-month high, up $19.10 to $1,137.40 an ounce. The PHLX Gold/Silver Sector Index (XAU) rose 3.85 points to $167.96. Yesterday’s rise in the XAU resulted in a near breakthrough of the three-month resistance line drawn from the early December high at over $195 and a clear break through its 50-day moving average.
What the Markets Are Saying
Each of the major indices has grudgingly closed above its 50-day moving average as low volume but acceptable breadth again marked yesterday’s trading.
But one bright spot has emerged, and that is the action of Nasdaq. It is the only major index to fully clear its 50-day moving average. And yesterday it even rose to the bottom of the next resistance zone at 2,270 to 2,326.
But the other indices seem stuck despite small gains: The Dow is at its highest level in five weeks, but it is capped by the February high of 10,459. The S&P 500 is now well into the next resistance zone of 1,115 to 1,150, but its internal indicators are not so overbought, and volume is so low that its staying power is questionable.
There is one other noteworthy development, besides the breakout of the PHLX Gold/Silver Sector Index mentioned above. That is the reversal of the iShares FTSE/Xinhua China 25 Index (FXI).
After a clear breakdown in January and February that resulted in a crossing of the 200-day moving average by the 50-day moving average (a death cross), the index has had a dramatic high-volume recovery in just two days. It is not unusual for a major ETF, especially the difficult FXI, to bounce following a breakdown, but the extent of the rebound and the accompanying high volume is unusual and bears watching for additional signs of a genuine reversal.
The bottom line is still one of caution, but the bull is stirring while the bear is still pacing. Neither, it seems, wants to give away much ground.
Today’s Trading Landscape
Earnings to be reported before the opening include: Big Lots, BJ’s Wholesale Club, Brown Shoe, Canadian Solar, Carrizo Oil & Gas, China Medical Technologies, Costco, DineEquity, Joy Global, Lincoln Educational Services, LoJack, Maidenform Brands, Nelnet, Netezza, Pozena and Rimage.
Earnings to be reported after the close: Alliance Imaging, Altra Holdings, American Railcar Industries, Cbeyond, Celera, Coldwater Creek, Coleman Cable, Comtech Telecommunications, Cross Country Healthcare, Darling International, DCP Midstream, DivX, Dynamex, Famous Dave’s, Finisar, Foot Locker, Fuel-Tech, Home Inns, Jazz Pharmaceuticals, LHC Group, Natural Gas Services, PetSmart, Sigma Designs, Sina, Sun Healthcare, Take-Two Interactive Software, Triangle Capital, Virgin Mobile USA, Volcano, WCA Waste and Yamana Gold.
Economic reports due: MBA purchase applications, Challenger Job-Cut Report, ADP employment report, ISM non-manufacturing index (the consensus expects 51), EIA petroleum status report and Beige Book.
Quarterly earnings news (earnings vs. expected):
- Big Lots (BIG): $1.31 vs. $1.28
- BJ’s Wholesale (BJ): 95 cents vs. 96 cents
- Costco (COST): 70 cents vs. 72 cents
- Dine Equity (DIN): 76 cents vs. 15 cents
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