On Thursday, optimism over a more aggressive stimulus program for Europe and anticipation of a higher non-farm payrolls report today pushed the Dow and S&P 500 to new highs.
Small- and mid-cap stocks lagged despite the ECB’s decision following a similar announcement from Japan at the end of last week. The euro traded at a new low versus the U.S. dollar. Utilities and telecom stocks fell sharply after rising earlier this week.
The Labor Department reported that jobless claims fell to a 14-year low during the week ending Nov. 1. And productivity of U.S. workers rose more than forecast in Q3.
But traders are nervous about the continuing drop in the price of commodities, especially crude oil, which fell 1% to $77.91 a barrel. Gold lost 0.3% at $1,142.30 a troy ounce. The yield on the 10-year Treasury note rose to 2.38% from 2.35% Wednesday.
In a slower day of trading compared with the past two weeks, the Dow Jones Industrial Average rose 70 points to 17,554, and the S&P 500 gained 8 points to close at 2,031. The Nasdaq was up 18 points at 4,638, and the Russell 2000 gained 5 points at 1,172.
The NYSE’s primary market traded 751 million shares with total volume of 3.6 billion. The Nasdaq crossed a total of 1.9 billion shares. On the Big Board, advancers outpaced decliners by 1.3- to-1, and on the Nasdaq, advancers were ahead by 1.4-to-1.
The Nasdaq broke to a 14-year high Monday on a gap that closed on Tuesday. However, the mid-cap index has failed to advance further. MACD continues to fall. Immediate support is at the 50-day moving average, which is more than138 points below Thursday’s close.
On Tuesday, I noted the existing death cross on the Russell 2000’s chart and the open gap at 1,159 to 1,167. The gap has now closed, which is a good sign, but normally after closing a gap the index picks up buyers using the base formed as a platform for further advance. Until a new high occurs, this chart is telling us nothing more than that it is still consolidating.
Conclusion
A lower volume day with tight breadth of just above even is not conducive to a breakout. We remain in cash and only buying obvious bargains at limit prices, not market orders.
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.
