The holiday-shortened trading week ended with low volume and a flat close on Thursday. So far for the month of December, which is usually up, the S&P 500 has fallen 0.9%.
Commodities, especially crude oil, and junk bonds led the overall decline. But last week’s results looked slightly more positive, ending with a rally in energy stocks. Yet, even with this, the Energy Select Sector SPDR (ETF) (XLE) is down 9.5% month to date.
After a rally that lasted most of Thursday’s abbreviated session, a wave of selling sent stocks back to their opening prices.
Chipmakers advanced 0.4%, but the overall technology sector was the victim of selling in Apple Inc. (AAPL), Alphabet Inc (GOOGL) and Microsoft Corporation (MSFT).
Crude oil was up 1.6% at $38.10 a barrel and finished the week up 5.7%. Gold gained 0.7% Thursday at $1,077.20 an ounce. The euro rose slightly against the U.S. dollar to $1.0978.
At Thursday’s close, the Dow Jones Industrial Average was down 50 points at 17,552, the S&P 500 fell 3 points to 2,061, the Nasdaq rose 3 points to 5,048, and the Russell 2000 gained 2 points at 1,155.
The NYSE Composite’s primary exchange traded 393 million shares with total volume of 1.4 billion shares. The Nasdaq crossed 707 million shares. On the Big Board, advancers exceeded decliners by 1.2-to-1, and on the Nasdaq, advancers led by 1.3-to-1. Block trades totaled 2,494 down from 4,946 on Wednesday.
It was a slow week on the Dow Jones Industrial Average with low positive volume. The last high-volume day was on Friday, Dec. 18. The index is very close to its resistance line at 17,590, which makes this week’s action more significant.
Like the Dow, the S&P 500 is in a channel down formation. The highest volume, again like the Dow, was on a down day, and resistance, at 2,080, is within reach.
Conclusion
According to the Stock Trader’s Almanac, the final four days of the year are all usually up. For example, from 1953 to 2013, the chances of a Dow advance on those days range from 47.5% to 70.5%. The probabilities are similar for the S&P 500, Nasdaq and Russell 2000.
This week we may confirm the validity of that pattern. However, resistance is so strong that even if we have a minor advance each day, in my opinion the chances of an overall breakout are not high.
Traders should focus on beaten-down stocks in the biotech and energy sectors for high-probability bounces.
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.
