Good morning! Even though the market got off to a great start on the week, the indices have had a very difficult time following through on that strength and have been caught in a range ever since. On Wednesday the Dow Jones Industrial Average ($DJI) lost 22.35 points, the S&P 500 ($SPX) fell 1.86 points and the Nasdaq Composite ($COMPX) lost 6.52 points. The closing levels were within the range of the trading that took place in the first 15 minutes of the day.
The indices gapped slightly lower to begin the day. The Nasdaq saw the greatest relative weakness with the largest point losses in AAPL, CELG, PCAR, ERTS, ORCL, APOL, EXPD, NTAP, ADBE and YHOO. Software stocks saw some of the strongest selling, falling 1.3% as a whole on the day, while banks and REITS also fell on the day. The weakness was not universal, however, and the multimedia networking, broker/dealers and oil all posted gains.
Although the indices never really moved too far off their morning lows, they were able to close the zone of the gap. The pace within the range remained slightly more bullish until the 13:00 ET reversal period hit. The market had popped a bit out of the 12:00 ET reversal period and this pop closed the gap zone in the Nasdaq Composite. The pace was indifferent on the pullback off those highs, but once the Nasdaq came into its 5 minute 20 sma support and the S&P 500 and Dow came back into the lower end of the trading range the momentum began to change. The indices hugged the support zone into the 15:00 ET reversal period. At that point the support gave way and the market sold off for a bit until correcting slightly again off the lows into the close.
On Thursday we should start to see the range open up again intraday. The rounded highs will leave an opening for the bears into the open, but unless the market sells off sharply at that time then there is still room on the daily charts for another stab at highs. I think a bit of a downside flush and then another attempt at the upper levels of this daily range is most likely at this point, but then it will be easy for the market to turn back over like we saw a couple of weeks ago on the holiday drop.
Economic Reports and Events This Week
Monday: -
Tuesday: Productivity-Rev. for Q3 (8:30 am), Factory Orders for Oct. (10:00 am), ISM Services for Nov. (10:00 am)
Wednesday: Crude Inventories 12/01 (10:30 am)
Thursday: Initial Claims 12/02 (8:30 am), Consumer Credit for Oct. (3:00 pm)
Friday: Average Workweek, Hourly Earnings, Nonfarm Payrolls, and Unemployment Rate for Nov. (8:30 am), Mich. Sentiment-Prel. for Dec. (10:00 am)
Key Earnings Announcements This Week
Monday: NRGY, IMKTA, CMTL, CNQR, and PLL
Tuesday: AZO, KR, SAFM, TOL, WWE, AGIL, CPRT, NOVL, and PLAB
Wednesday: KFY, TWTR, NX, CWST, DDMX, GEF, LQDT, NCS, SEAC, UTI, and VTS
Thursday: CRMT, CBUK, FLE, GIL, HITK, JJZ, JOSB, METH, MOV, PTMK, TOPT, TTC, ATW, CENT, SMOS, DMND, ESL, NSM, SHFL, and PAY
Friday: BKRS
Note: All economic numbers and earnings reports are in lines with those compiled by Yahoo Finance and Briefing.com. Occasionally changes will occur that are made after the posting of this column.
Toni Hansen is President and Co-founder of the Bastiat Group, Inc., and runs the popular Trading From Main Street. She can be reached at Toni@tradingfrommainstreet.com.